The "Nagasaki Spirit"

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 27 April 1994
• Neutral Citation: [1994] SGHC 115
• Date: 27 April 1994
• Subject Matter: O 70 r 16 Rules of the Supreme Court 1990,Whether expenses were necessarily incurred by Sheriff in carrying out his duties,Whether prior sanction of court or Sheriff needed to classify expenses as Sheriff's expenses,Balancing the equities,Admiralty and Shipping,Interest arising from hardship caused by arrest of vessel,Whether such expenses to be classified as Sheriff's expenses,Interest in the property,Application to intervene by shipyard owners,Inherent jurisdiction of court to allow party to intervene,Action in rem,Sheriff's expenses in connection with an arrested res,Interveners,Wharfage, preservation and maintenance of arrested vessel,Expenses incurred by shipyard in shifting arrested vessel to another shipyard,Admiralty jurisdiction and arrest
• Docket Number: Admiralty in Rem No 845 of 1992 (Summons in Chambers No 2087 of 1993),Admiralty in Rem No 164 of 1993
• Published date: 19 September 2003
• Defendant Counsel: PK Gurbani and Mohan (Gurbani & Co),Corina Song (Haridass Ho & Pnrs),Tan Puay Boon,Timothy Tan (Khattar Wong & Pnrs)
• Court: High Court (Singapore)
• Plaintiff Counsel: S Suresh and Andrew Chan (Allen & Gledhill)

Cur Adv Vult

The Nagasaki Spirit, a very large oil tanker, was involved in a collision with the container ship Ocean Blessing in the Straits of Malacca shortly before midnight on 19 September 1992 some 30 miles east north east of Gjung Tamiang and 45 miles north of Belawan, Sumatra, Indonesia. Both vessels were severely damaged and both vessels caught fire. All but two of the crew of the Nagasaki Spirit and all the crew of the Ocean Blessing died.

The location of the collision came under the jurisdiction of the government of Indonesia, with whose permission the Nagasaki Spirit was towed by Semco Salvage & Marine Pte Ltd (`Semco`) to Singapore pursuant to a salvage agreement dated 19 September 1992 entered into between Teekay Shipping (Canada) Ltd (`Teekay`), the managing agents of the Nagasaki Spirit and Semco. The purpose of bringing the burst and damaged hulk of the Nagasaki Spirit to Singapore was for a detailed survey and inspection and to determine whether the Nagasaki Spirit was a constructive total loss. On arrival at Singapore on 12 December 1992 the hulk of the Nagasaki Spirit was berthed alongside at the shipyard of Hitachi Zosen Singapore Ltd (`Hitachi`); it appears that this was with the acquiesence of Hitachi. At the time of the collision the Nagasaki Spirit was time-chartered to BP Shipping Ltd (`BP`).

On 14 December 1992, the owners of cargo lately laden on the Ocean Blessing commenced these admiralty proceedings in rem against the owners of the Nagasaki Spirit for loss and damage to their cargo shipped aboard the Ocean Blessing and for an indemnity against any liability for any salvage or salvage services rendered to the Ocean Blessing and, or, for any general average loss or expenditure attributable to them and on the same date arrested the Nagasaki Spirit whilst she lay berthed alongside at Hitachi`s shipyard. As is usual, the solicitors for the owners of cargo lately laden on the Ocean Blessing gave an undertaking in writing to the Sheriff of Singapore to meet the charges and expenses that may be incurred in consequence of executing the warrant of arrest pursuant to which the Nagasaki Spirit was arrested as aforesaid.

The owners of the Nagasaki Spirit entered an appearance to the admiralty in rem proceedings on 17 December 1992 but took no further steps in the proceedings thereafter. It would appear that they had abandoned the Nagasaki Spirit as a constructive total loss albeit at the disposal of the owners of cargo lately laden on the Ocean Blessing under whose arrest she was in these admiralty in rem proceedings. In the meanwhile several other claimants, having obtained leave to intervene in these proceedings, entered appearance as interveners. Semco was among them.

The Nagasaki Spirit remained under arrest in these proceedings, at the instance of the owners of cargo lately laden on the Ocean Blessing, from the date of her arrest on 14 December 1992 to the date of her sale by the Sheriff and delivery to the new owners on 4 May 1993. From 14 December 1992 to 12 March 1993 she was berthed alongside at Hitachi`s shipyard and from 13 March 1993 to 4 May 1993 she was berthed alongside at the shipyard of Pioneer Offshore Services Pte Ltd (`Pioneer`). The shifting of berth from Hitachi`s shipyard to Pioneer`s shipyard took place on 12 March 1993 in circumstances which will become apparent later in this judgment. The Nagasaki Spirit was sold by the Sheriff for S$12,876,000 which sum, pending the determination of priorities of claims, was to be held and I believe is still held to the credit of these proceedings.

Hitachi who had not taken legal advice as to its obligations rights and duties with regard to the presence of the arrested Nagasaki Spirit at its shipyard but who had nevertheless undertaken the responsibility of maintaining and preserving the Nagasaki Spirit at least to the extent of preventing her from becoming a wreck in its own shipyard through neglect, feeling that the presence of the Nagasaki Spirit in its shipyard was causing conjestion and using up wharf space which could otherwise be profitably used decided to take legal advice on or about 11 March 1993 with a view to shifting the Nagasaki Spirit to Pioneer`s shipyard. Accordingly Hitachi`s solicitors wrote to the Sheriff on 11 March 1993 informing him of the necessity to shift the Nagasaki Spirit out of Hitachi`s shipyard and informed him that arrangements had been made to shift the Nagasaki Spirit to Pioneer`s shipyard for which purpose Hitachi had obtained from Pioneer a quotation for the towage, berthing charges and subsequent necessary services that will be required. A quotation from Pioneer was enclosed and the Sheriff was asked to immediately confirm that he had no objection to the shifting of the Nagasaki Spirit from Hitachi`s shipyard to Pioneer`s shipyard and that the cost of shifting and other necessary services required will form part of the Sheriff`s expenses.

It appears that Hitachi`s solicitor`s letter above referred to was preceded by a telephone conversation between Mr Prem K Gurbani of Hitachi`s solicitors and Mr Ho Nguk Chang, the Chief Bailiff of the Supreme Court. Mr Ho has deposed to this conversation as follows:

On 11 March 1993, Mr Prem K Gurbani telephoned me in the morning and informed me that he acted for Hitachi and that the ship had to be shifted out from his clients` yard urgently due to conjestion in the yard. I told him that there was no order of court for the movement and the consent from the plaintiffs or their solicitors Messrs Allen & Gledhill was required. He told me that his clients could not wait for the plaintiffs` consent and requested me to take out an omnibus order urgently. In respect of the shifting expenses, he said he would sort out the matter with Messrs Allen & Gledhill.

The omnibus order was obtained on the morning of 12 March 1993 by the terms of which the Sheriff was authorized, generally, to take such action as he may deem necessary or expedient for the preservation and maintenance of the Nagasaki Spirit.

Mr Ho further deposed as follows:

On 12 March 1993, an omnibus order was obtained by the Sheriff. Mr Prem K Gurbani telephoned me again some time at or about noon and told me that their clients were on the move to tow the ship even though I told him that the plaintiffs` solicitors had not consented to such move. He insisted that the ship had to be moved on that day and could not wait for plaintiffs` solicitors` consent due to the tight schedule of the yard and to catch the tide, having regard to the size of the ship. I had no choice but to allow them to move the ship. There was no mention of shifting expenses on that day.

I did make several attempts to contact Pioneer Offshore Enterprises Pte Ltd (Pioneer) in respect of daily berthing charges, but I was not able to speak with Mr John Koh, the person in charge of Pioneer, despite messages left with the secretary. Mr Prem Gurbani told me subsequently that Pioneer would not negotiate with the Sheriff as the arrangement for the movement of the vessel was made between Hitachi and Pioneer.

Between the time the ship was arrested on 11 March 1993 neither the plaintiffs nor their solicitors, nor Hitachi nor their solicitors, contacted the Sheriff to discuss the issue of who is to pay for the preservation and maintenance of the ship while it was in Hitachi`s yard. The first time the subject was broached in correspondence between the parties was in the letter dated 23 March 1993 from Messrs Gurbani & Co to the Sheriff.

Indeed this is correct for until 23 March 1993, Hitachi`s solicitors were concerned only to get the Sheriff`s confirmation that the expenses of shifting the Nagasaki Spirit from Hitachi`s shipyard to Pioneer`s shipyard and Pioneer`s daily expenses of keeping the Nagasaki Spirit at its shipyard and Pioneer`s expenses of maintaining and preserving her will be borne by the Sheriff as part of his expenses. Pioneer had indicated quite clearly that it would look to Hitachi alone for these expenses. What Gurbani & Co said of the expenses incurred by Hitachi in keeping the Nagasaki Spirit at Hitachi`s shipyard and of the expenses incurred in preserving and maintaining her was:

One other matter that we have been instructed to raise is the matter of the expenses incurred by our clients for the maintenance of the vessel at their yard following the arrest of the vessel on 14 December 1992 until the vessel left for Pioneer`s yard on 12 March 1993. These expenses amount to S$1,039,766. We are of the view that these expenses should form part of the Sheriff`s expenses as well. If you have a different view, please let us know immediately and we will make an application to court for an order to treat these expenses as part of the Sheriff`s expenses. We enclose herewith a breakdown of the aforesaid expenses amounting to S$1,039,766 for your perusal.

The Sheriff did not commit himself one way or the other in view of the opposing positions taken by the plaintiffs, the owners of cargo lately laden on the Ocean Blessing, the arresting party, and Hitachi as to whether all these expenses could, in law, be considered to be part of the Sheriff`s expenses. In the result Hitachi took out an application by way of summons-in-chambers on 8 April 1993 for the following orders:

(1) for liberty to intervene in these proceedings and to enter an appearance as interveners;

(2) for an order that the sum of S$1,039,766 being expenses incurred by Hitachi between 14 December 1992 and 12 March 1993 for the preservation and maintenance of the Nagasaki Spirit rank as Sheriff`s expenses and be paid accordingly;

(3) for an order that all expenses incurred in connection with the shifting of the Nagasaki Spirit from Hitachi`s shipyard to Pioneer`s shipyard on 12 March 1993 and all subsequent expenses incurred or to be incurred by Hitachi for the preservation and maintenance of the Nagasaki Spirit rank as Sheriff`s expenses...