The “Min Rui”

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 05 September 2016
• Court: High Court (Singapore)
• Docket Number: Admiralty in Rem No 271 of 2014 (Registrar's Appeal No 342 of 2015)
• Date: 05 September 2016

The ‘Min Rui’

[2016] SGHC 183

Belinda Ang Saw Ean J

Admiralty in Rem No 271 of 2014 (Registrar's Appeal No 342 of 2015)

High Court

Admiralty and Shipping — Admiralty jurisdiction and arrest — Ownership of vessels — Action in rem — Arrest of vessel — Whether admiralty jurisdiction properly invoked — Test of beneficial ownership of vessel — Displacing prima facie inference of ownership from certificate of registration — Whether sale of vessel genuine — Section 4(4) High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Rev Ed)

Conflict of Laws — Jurisdiction — In rem — Admiralty jurisdiction of High Court — Lex fori — Relevant foreign law

Personal Property — Ownership — Beneficial — Test of beneficial ownership of vessel — When transfer of beneficial ownership of vessel took place in context of sale — Whether late notarisation of bill of sale post-dated transfer of beneficial interest

Facts

This appeal arose from an admiralty in rem action where the defendant was sued as the party liable on the plaintiffs' claim for loss and damage to a consignment of steel structures shipped on board the Min Rui, a Hong Kong registered vessel, on 24 June 2014 at Humen, China for carriage to and delivery at Itajai, Brazil. The main issue in the appeal was whether, the defendant was, on 16 December 2014, the date on which the plaintiffs issued the in rem writ, the beneficial owner as respects all shares in the Min Rui within the meaning of s 4(4)(i) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (‘the HCAJA’).

The defendant argued that it sold the Min Rui in October 2014 to a bona fide purchaser for value and was no longer the owner even though it was still the named registered owner in the Hong Kong Shipping Register on 16 December 2014. The sale was conducted pursuant to a Memorandum of Agreement (‘the MOA’). Delivery of possession of the vessel took place on 12 December 2014 at Qingdao, China where the executed bill of sale without the notarial certification required under the MOA was handed over to the buyer who signed the acceptance of sale. It was only on 7 January 2015 that the Min Rui was deregistered from the Hong Kong Shipping Register. Notarisation of the bill of sale was later attended to on 20 January 2015. Registration of the vessel in Panama under the buyer's name was completed on 24 February 2015. Previously, only a temporary navigational licence was issued to the buyer in respect of the Min Rui (under her new name) on 24 November 2014.

On the other hand, the plaintiffs contended that the defendant was the beneficial owner on 16 December 2014, and the arrest of the Min Rui was not wrongful. They relied on the Hong Kong Shipping Register that reflected the defendant as the registered owner until 7 January 2015. The plaintiffs further argued that the late notarisation of the executed bill of sale meant that beneficial ownership of the Min Rui still remained with the defendant on 16 December 2014. The plaintiffs also challenged the sale of the Min Rui as being not a genuine one.

Held, allowing the appeal:

(1) For the purposes of s 4(4)(i) of the HCAJA, the certificate of registration was not a certificate of title; the ship's register served as a record upon which a prima facie inference of ownership was made. This prima facie inference of ownership could be displaced by evidence that someone else was the beneficial owner: a question of looking at the facts and drawing proper conclusions since there was no rule of law that fraud or similarly compelling circumstances must be proved in order to go behind the registration of a ship: at [27] and [33].

(2) Singapore law, as the lex fori, determined the issue of beneficial ownership under the HCAJA. Foreign law might be adduced as facts to examine the ownership rights that the relevant parties had over the arrested vessel. The issue of beneficial ownership was ultimately determined by Singapore law as the lex fori with the foreign legal context characterised and analysed within the yardstick of the lex fori: at [30] and [54] to [56].

(3) Hong Kong law on registration of a ship would have been relevant to the question of what the legal consequences were pending de-registration of the Min Rui following a concluded sale. Hong Kong law on registration was not adduced, and the beneficial ownership issue fell to be decided applying the lex fori: at [57] and [62].

(4) English law as the proper law of the MOA was relevant in examining the nature and extent of contractual rights created or recognised by the sale and delivery of the Min Rui. The MOA was intended as an agreement to sell and buy the Min Rui. Title and risk was to transfer at a later date which in this case was on 12 December 2014. The sale of the Min Rui was genuine. Cogent evidence had to be adduced for a finding of a sham transaction. Contemporaneous documentary evidence of the sale and transfer of the Min RuiENR was comprehensive. The hint at the use of a common company secretary and same registered address by the defendant and buyer was not enough to support a claim that the transaction was not genuine: at [37], [45] [46], [64], [72] and [73].

(5) The executed bill of sale was handed over, and there was physical delivery of the Min Rui to the buyer on 12 December 2014. The protocol of delivery and acceptance served as a record of the time ownership and risk in the Min Rui passed from the defendant to the buyer. The beneficial ownership of the Min Rui passed to the buyer on 12 December 2014 at Qingdao, China. After that, the defendant retained no beneficial interest in the Min Rui and pending de-registration from the Hong Kong Shipping Register, the defendant would hold the Hong Kong registered title over the Min Rui on trust for the buyer: at [74].

(6) Late notarisation of the executed bill of sale did not post-date any transfer of beneficial interest on 12 December 2014. The courts would prefer substance to form and would not permit formal defects to undermine the substance of a transaction. When parties themselves had varied or waived a contractual requirement, an outsider had no legal basis to argue such a point. The absence of notarisation at the point of closing also did not affect the substantive rights of parties: at [48] to [50].

Case(s) referred to

Almojil 61, The [2015] 3 HKLRD 598 (refd)

Andres Bonifacio, The [1993] 3 SLR(R) 71; [1993] 3 SLR 521 (folld)

Enfield, The [1981–1982] SLR(R) 527 (refd)

Evpo Agnic, TheWLR [1988] 1 WLR 1090; [1988] 2 Lloyd's Rep 411 (refd)

Halcyon Isle, The [1979–1980] SLR(R) 538; [1980–1981] SLR 14 (refd)

Jarguh Sawit, The [1997] 3 SLR(R) 829; [1998] 1 SLR 648 (folld)

Kapitan Temkin, The [1998] 2 SLR(R) 537; [1998] 3 SLR 254 (refd)

Makassar Caraka Jaya Niaga III-39, The [2011] 1 SLR 982 (refd)

Nazym Khikmet, TheUNK [1996] 2 Lloyd's Rep 362 (refd)

NV Stoomvaart Maatschappij ‘Vredobert’ v European Shipping Co LtdUNK [1926] 25 Lloyd's Rep 210 (refd)

Ocean Enterprise, TheUNK [1997] 1 Lloyd's Rep 449 (refd)

Ohm Mariana, The; ex Poeny [1993] 2 SLR(R) 113; [1993] 2 SLR 698 (folld)

Opal 3, The; ex Kuchino [1992] 2 SLR(R) 231; [1992] 2 SLR 585 (refd)

Pangkalan Susu/Permina 3001, The [1977–1978] SLR(R) 105; [1975–1977] SLR 252 (folld)

Raftland Pty Ltd v Federal Commissioner of TaxationUNK [2008] HCA 21 (refd)

Sangwon, The [1999] 3 SLR(R) 919; [2000] 1 SLR 321 (refd)

Saudi Prince, TheUNK [1982] 2 Lloyd's Rep 255 (refd)

Skaw Prince, The [1994] 3 SLR(R) 146; [1994] 3 SLR 379 (refd)

Temasek Eagle, The [1999] 2 SLR(R) 647; [1999] 4 SLR 250 (refd)

Tian Sheng No 8, TheUNK [2000] 2 Lloyd's Rep 430 (distd)

Tisand (Pty) Ltd v The Owners of the Ship MV ‘Cape Moreton’ (ex ‘Freya’) [2005] FCAFC 68 (refd)

Tjaskemolen, TheUNK [1997] 2 Lloyd's Rep 465 (refd)

TS Havprins, TheUNK [1983] 2 Lloyd's Rep 356 (refd)

Legislation referred to

High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) s 4(4)(i) (consd); ss 3(1)(g), 3(1)(h), 4(4), 4(4)(b), 4(4)(ii)

Admiralty Act 1988 (Cth) ss 17, 19

High Court Ordinance (Cap 4) (HK) ss 12B(4), 12B(4)(b), 12B(4)(i), 12B(4)(ii)

Prakash Nair and Nazirah d/o Kairo Din (Clasis LLC) for the plaintiffs;

Chua Kok Wah and Yeo Wen Yi Brenna (Joseph Tan Jude Benny LLP) for the defendant.

5 September 2016

Belinda Ang Saw Ean J:

Introduction

1 In this action, the defendant, Min Rui Shipping Co Ltd, was sued as the party liable on the plaintiffs' claim for loss and damage to a consignment of steel structures that was described as 98 packages of ‘steel structure FPSO – Floating Production, Storage Offloading NCM 7308 90.10’ and shipped on board the Hong Kong registered vessel, Min Rui, on 24 June 2014 at Humen, China for carriage to and delivery at Itajai, Brazil. The consignment of steel structures was damaged in the course of the carriage, and the plaintiffs sued as the owners, consignees and/or bill of lading holders.

2 At the hearing of this Registrar's Appeal No 342 of 2015 (‘RA 342’), the defendant dropped its appeal against the assistant registrar's rejection of the defendant's allegation that the plaintiffs had not discharged their duty of full and frank disclosure in obtaining the warrant of arrest of the Min Rui. The remaining issue in RA 342 was the defendant's jurisdictional challenge that was limited to the question of whether the defendant was the beneficial owner as respect all the shares in the vessel Min Rui on 16 December 2014, which was the date the plaintiffs issued the in rem writ in Admiralty in Rem No 271 of 2014 (‘ADM 271’).

3 The in rem writ in ADM 271 was not amended to cater for the new name of the Min Rui. At the time of the arrest, the Min Rui was already renamed Qi Dong and even though the...