The Maritime Claimant’s Right to Security: “The Suhaili 5201”1

• Citation: (1989) 1 SAcLJ 118
• Published date: 01 December 1989
• Author: DAVID CHONG GEK SIAN
• Date: 01 December 1989

The decision of the Court of Appeal in ‘The Suhaili 5201’ is a landmark decision for two reasons. First, the Court of Appeal recognised that a maritime claimant who has instituted an action in rem against a vessel is entitled to sufficient security to cover the amount of his claim with interest and costs on the basis of his reasonably arguable best case. This principle has long been the guiding principle applied by the English courts in actions in rem and the recognition of this principle by the Singapore Court of Appeal assimilates the Singapore practice with regards to the plaintiffs entitlement to the amount of alternative security to the English practice. Secondly, the Court of Appeal also categorically stated that “whilst the court may have no jurisdiction to vary the method of security agreed to between the parties, the court’s power to control the amount of security in actions in rem is not ousted by the mere fact that the amount of security had originally been agreed to.”2 This principle, founded as it is on the inherent jurisdiction of the court to prevent litigants from acting oppressively and abusing the curial process, is of great import for it takes into account the realities of the situation - security is often demanded of shipowners under pain of admiralty arrest of their trading vessels and shipowners have no choice but to furnish security to the plaintiffs’ satisfaction. To permit plaintiffs to make exorbitant demands for security in lieu of an admiralty arrest of a vessel will be to sanction the reprehensible conduct of the plaintiffs in abusing the process of the court.

The facts of ‘The Suhaili 5201’ may be shortly stated. Sing Koon Seng Shipbuilding & Engineering Pte. Ltd., a ship-repair and building company (hereafter referred to as the “plaintiffs”) carried out modification works on the ‘Suhaili 5201’. Due to non-payment of the costs of the modification works, the plaintiffs commenced an action in rem against the ‘Suhaili 5201’ and caused the vessel to be arrested on July 1, 1986. In consideration for the release of the vessel from admiralty arrest, the plaintiffs demanded that the owners of the ‘Suhaili 5201’ pay a sum of $1,584,530.74 into court. However, the owners of the ‘Suhaili 5201’ made an application to the court and obtained an order from Wahab Ghows J. that the vessel be released from arrest on the owners’ providing a bank guarantee3 in the sum requested for by the plaintiffs. The

‘Suhaili 5201’ was released from admiralty arrest on 16 July 1986 after the said bank guarantee was given to the plaintiffs. After the plaintiffs had filed their statement of claim, the owners of the ‘Suhaili 5201’ applied by way of motion for an order that the bank guarantee which had been provided to obtain the release of the ‘Suhaili 5201’ from admiralty arrest be cancelled or reduced in amount. The motion 4 came before Coomaraswamy J., who ordered the cancellation of the said bank guarantee and the return of the cancelled bank guarantee to the owners of the ‘Suhaili 5201’. One of the plaintiffs’ contentions in the proceedings before Coomaraswamy J. was that the “court had no initial jurisdiction to order a guarantee as a preliminary to the release of the vessel (from admiralty arrest)5”6 and consequently the “court had no jurisdiction to hear any application to vary the sum guaranteed or to cancel the guarantee.”7 That contention was founded on the rules of Order 70 in the Rules of the Supreme Court, 1970 which expressly referred to the provision of bail bond and payment of money into court as security in lieu of a vessel subject to admiralty arrest. According to the plaintiffs, the absence of any reference to bank guarantees in Order 70 of the Rules of the Supreme Court, 1970 meant that the court had no jurisdiction to order the release of a vessel under admiralty arrest against the provision of a bank guarantee.8 In response to this contention of the plaintiffs that the court had no jurisdiction 9 to vary the amount of the bank guarantee, Coomaraswamy J. held that the court possesses jurisdiction10

to so vary the amount of the bank guarantee which had been provided to obtain the release of the ‘Suhaili 5201’ from arrest in the plaintiffs’ action in rem. At any rate, the learned judge pointed out that the failure of the plaintiffs to appeal against the order of Wahab Ghows J. in the motion for release of the ‘Suhaili 5201’ against the provision of a bank guarantee had “invested the court with jurisdiction to make the order and, consequently, to vary it.”11 When the matter came before the Court of Appeal, the plaintiffs had, subsequent to the decision of Coomaraswamy J. at first instance, re-amended their statement of claim such that the amount of their claim had decreased to $669,552.30 from the amount of S$l,050,358.62 pleaded as the quantum of the plaintiffs’ claim in their amended statement of claim.

In the Court of Appeal, the plaintiffs succeeded in obtaining security for a sum of $169,552.30 plus interest and costs. The major part of the plaintiffs’ claim, namely the claim for $500,000.00 being the remainder of the cost of modification works to the ‘Suhaili 5201’, was adjudged to be a claim for which, under the express provisions of the main contract relating to modification works to the ‘Suhaili 5201’, the plaintiffs were not entitled to security at the date the plaintiffs commenced their action in rem.12

Commentary

It is significant to note that although the plaintiffs conceded in the Court of Appeal that the court had jurisdiction to vary the amount of security to be provided in an action in rem, Wee Chong Jin C.J., who delivered the judgment of the Court of...