The “Ocean Winner”

• Jurisdiction: Singapore
• Judge: Ang Cheng Hock J
• Judgment Date: 15 January 2021
• Docket Number: Admiralty in Rem No 86 of 2020 (Summons No 1912 of 2020); Admiralty in Rem No 87 of 2020 (Summons No 1913 of 2020); Admiralty in Rem No 88 of 2020 (Summons No 1914 of 2020); Admiralty in Rem No 89 of 2020 (Summons No 1915 of 2020)
• Court: High Court (Singapore)

The “Ocean Winner” and other matters

[2021] SGHC 8

Ang Cheng Hock J

Admiralty in Rem No 86 of 2020 (Summons No 1912 of 2020); Admiralty in Rem No 87 of 2020 (Summons No 1913 of 2020); Admiralty in Rem No 88 of 2020 (Summons No 1914 of 2020); Admiralty in Rem No 89 of 2020 (Summons No 1915 of 2020)

General Division of the High Court

Admiralty and Shipping — Practice and procedure of action in rem — Writ in rem — Plaintiff filing admiralty in rem writs against ships without leave of court while there was subsisting moratorium under s 211B Companies Act (Cap 50, 2006 Rev Ed) in favour of ships' bareboat charterer — Whether plaintiff required leave of court to file admiralty in rem writs — Section 211B Companies Act (Cap 50, 2006 Rev Ed)

Civil Procedure — Striking out — Whether admiralty in rem writs should be struck out or set aside because they were filed without leave of court — Order 12 r 7(1) and O 18 r 19(1) Rules of Court (Cap 322, R 5, 2014 Rev Ed)

Companies — Schemes of arrangement — Whether filing of admiralty in rem writ was commencement of “proceedings” against bareboat charterer under s 211B(8)(c) Companies Act (Cap 50, 2006 Rev Ed) — Whether filing of admiralty in rem writ was “execution, distress or other legal process” against “property” of bareboat charterer under s 211B(8)(d) Companies Act — Sections 211B, 211B(8)(c) and 211B(8)(d) Companies Act (Cap 50, 2006 Rev Ed)

Held, dismissing the applications:

(1) The filing of the Writs was not the commencement of “proceedings” within the meaning of s 211B(8) of the CA, since it merely created the security interest (viz, the statutory lien, granted by s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (“HCAJA”)) for the plaintiff. The admiralty jurisdiction of the court was not yet invoked. In that limited sense, the action did not substantively “commence” until service of the Writs. The filing of the admiralty in rem writ merely crystallised the claimant's security interest, and the company was not denied any “breathing space” by the mere filing of the admiralty writs or was in any way hindered in its efforts to devise a scheme of arrangement: at [35], [58] and [71].

(2) If the plaintiff was unable to file the admiralty in rem writ to even create its statutory lien, the plaintiff's right to a security interest in the form of the statutory lien was potentially at risk of being destroyed by the shipowners. This was because the shipowner could defeat the plaintiff's in rem claim by terminating the bareboat charters with the charterers' agreement and accepting physical redelivery of the vessel before the writ was filed. While s 211B of the CA was intended to protect companies from being distracted by having to defend legal proceedings while devising a scheme proposal, it was never intended to defeat or deny the creation of substantive legal rights: at [61].

(3) That was precisely what OTPL and the Xihe Group attempted to do in this case. The person who would be liable in personam for PetroChina's cargo claims in the Writs was the bareboat charterer (OTPL), not the Vessels' owners. Yet, on or around 18 May 2020, after OTPL had been placed under IJM, OTPL sought to terminate the majority of its bareboat charterparties by redelivering the vessels to the respective Xihe Group shipowners. This was an obvious attempt to ring fence the Xihe Group's assets. The termination of the bareboat charterparties for Ocean Winner and Chao Hu (and potentially Ocean Goby and Ocean Jack) prevented further admiralty in rem writs from being issued against these ships pursuant to s 4(4) of the HCAJA, since OTPL would no longer be the ships' bareboat charterer: at [62] and [64].

(4) The fact that OTPL's judicial managers sought to disclaim the bareboat charterparties for all four of the Vessels on the basis that they were “unprofitable contracts” clearly demonstrated that even OTPL's own judicial managers took the view that these bareboat charterparties were not assets which OTPL required for any potential restructuring of OTPL's business: at [64].

(5) The filing of the Writs was not “against the company”, OTPL, since an action in rem was an action against the res, not the owner or the demise charterer of the vessel. Thus, the fact that the bareboat charterer, OTPL, was the so-called “true defendant” because PetroChina's cargo claims were, in substance, against the bareboat charterer was beside the point. If no appearance had been entered, the actions would remain, at all times, actions in rem against the res (ie, the Vessels), and OTPL would not be personally liable at all: at [68], [69] and [71].

(6) As such, s 211B(8)(c) of the CA did not apply to bar the filing of the Writs without prior leave of court: at [71].

(7) The mere filing of the admiralty in rem Writs was not an “execution” within the meaning of s 211B(8)(d) of the CA, because writs of execution were writs to enforce a judgment or order of court: at [73].

(8) The mere filing of the admiralty in rem Writs was also not “distress” within the meaning of s 211B(8)(d) of the CA, because “distress” was the process of distraining movable property to realise an amount of unpaid rent: at [73].

(9) The term “other legal process” under s 211B(8)(d) of the CA meant enforcement processes similar in nature to “execution” and “distress” proceedings. In other words, it referred to processes to seize the money or property of the company: at [76].

(10) The filing of the admiralty in rem Writs merely created the statutory lien and, thus, the security interest in the ship. There was no element of enforcement by such a step. Without filing the Writs, PetroChina's in rem claim did not even arise. Therefore, the filing of the Writs did not come within the meaning of “other legal process” in s 211B(8)(d) of the CA. This interpretation was also in line with the application of the ejusdem generis principle: at [77] and [79].

(11) As such, s 211B(8)(d) of the CA did not apply to bar the filing of the Writs without prior leave of court: at [93].

(12) As the filing of the Writs did not come within the meaning of ss 211B(8)(c) and 211B(8)(d) of the CA, no leave of court was required to file the Writs. Consequently, there was no basis to set aside or strike out the Writs. The Summonses were accordingly dismissed: at [94].

[Observation: Order 12 r 7(1) of the ROC applied to a situation where there was a dispute as to the existence (and not the exercise) of the court's jurisdiction. It was uncertain if O 12 r 7(1) of the ROC even provided a proper basis for OTPL's challenge to the Writs: at [29] to [31].

The admiralty actions had transformed into mixed actions in rem and in personam after OTPL entered appearance in them. Given that there was a subsisting moratorium applicable in OTPL's favour arising from the fact that it was now in judicial management, PetroChina would have to obtain leave of court if it wished to proceed with the claim in the Writs, including service of the Writs on the Vessels and arrest of the Vessels. Such steps would amount to commencing and thereafter continuing with “proceedings” against OTPL, now that the admiralty actions had also been imbued with in personam claims against OTPL: at [70].

While a bareboat charterer did not have legal or beneficial title to the vessel, the bareboat charterer had an interest in the vessel akin to a leasehold interest. The specific purpose of s 211B of the CA was to expand the scope of the moratorium under s 210(10) of the CA to cover the types of property interest, such as a leasehold interest, which were not previously covered under s 210(10). OTPL's bareboat charter interest in the Vessels therefore came within the meaning of “property” under s 211B(8)(d) of the CA: at [86] and [92].

The filing of the Writs also did not come within s 211B(8)(e) of the CA, as the mere filing of the admiralty Writs only created the security interest in the form of statutory liens over the Vessels. It was not a step taken to enforce that security: at [95].]

Case(s) referred to

Bolbina, The [1993] 3 SLR(R) 894; [1994] 1 SLR 554 (folld)

Bunga Melati 5, The [2012] 4 SLR 546 (refd)

Chee Siok Chin v Minister for Home Affairs [2006] 1 SLR(R) 582; [2006] 1 SLR 582 (refd)

Chem Orchid, The [2015] 2 SLR 1020 (refd)

Dictator, The [1892] P 304 (folld)

Fierbinti, The [1994] 3 SLR(R) 574; [1994] 3 SLR 864 (folld)

Hull 308, The [1991] 2 SLR(R) 643; [1991] SLR 304 (refd)

IM Skaugen SE, Re [2019] 3 SLR 979 (refd)

Indian Grace, The (No 2) [1998] 1 Lloyd's Rep 1 (refd)

Jian He, The [1999] 3 SLR(R) 432; [2000] 1 SLR 8 (refd)

Kuo Fen Ching v Dauphin Offshore Engineering & Trading Pte Ltd [1999] 2 SLR(R) 793; [1999] 3 SLR 721 (refd)

Kusu Island, The [1989] 2 SLR(R) 267; [1989] SLR 119 (folld)

Neo Corp Pte Ltd v Neocorp Innovations Pte Ltd [2005] 4 SLR(R) 681; [2005] 4 SLR 681 (refd)

PP v Lam Leng Hung [2018] 1 SLR 659 (refd)

Royal Bank of Scotland NV, The v TT International Ltd [2012] 2 SLR 213 (refd)

Tan Cheng Bock v AG [2017] 2 SLR 850 (refd)

Trade Resolve, The [1999] 2 SLR(R) 107; [1999] 4 SLR 424 (folld)

Facts

The present applications in Summonses Nos 1912–1915 of 2020 (“the Summonses”) were brought by the judicial managers of Ocean Tankers (Pte) Ltd (“OTPL”) to set aside and/or strike out four admiralty in rem writs (collectively, “the Writs”) filed by the plaintiff, PetroChina International (Singapore) Pte Ltd (“PetroChina”), on 22 April 2020 against four vessels which had been demise chartered by OTPL. The basis for these applications was that there was a subsisting automatic moratorium under s 211B of the Companies Act (Cap 50, 2006 Rev Ed) (“CA”) which applied in OTPL's favour at the time when the Writs were filed.

PetroChina was the “owner of and/or shipper and/or consignee and/or lawful holder” of certain bills of lading in respect of cargo shipped onboard the vessels named in the Writs (collectively, “the Vessels”). At all material times, OTPL was the bareboat...