The "Ohm Mariana" ex "Peony"

JudgeWarren Khoo L H J
Judgment Date31 May 1993
Neutral Citation[1993] SGCA 43
Docket NumberCivil Appeal No 47 of 1992
Date31 May 1993
Published date19 September 2003
Plaintiff CounselC Arul and Ng Liang Poh (C Arul & Partners)
Citation[1993] SGCA 43
Defendant CounselSri Ram and K Parasuram (Param & Partners)
CourtCourt of Appeal (Singapore)
Subject Matters 4(4) High Court (Admiralty Jurisdicton) Act (Cap 123),Words and Phrases,Issues decided by court of first instance not raised in the pleadings,Whether respondents were owners of the vessel at the time the cause of action arose,Particulars of fraud and malice relied upon should be specifically pleaded,s 3(1) High Court (Admiralty Jurisdiction) Act (Cap 123),Action in rem,Action continues as action in rem as well as action in personam,Whether High Court had jurisdiction to hear case,Claim for disbursements,No application set aside writ or warrant of arrest,Action in personam maintainable even if action in rem wrongly instituted,'Owner',s 4(4) High Court (Admiralty Jurisdiction) Act (Cap 123),Whether claims were disbursements made on account of a ship,Admiralty and Shipping,Civil Procedure,Whether claim fell High Court (Admiralty Jurisdiction) Act,Whether claimants were agents managing the vessel,Admiralty jurisdiction and arrest,Pleadings,O 18 r 12(1) Rules of the Supreme Court 1970,Unconditional appearance entered

Cur Adv Vult

This is an appeal against the decision of GP Selvam JC, in which he dismissed the appellants` claim against the respondents for disbursements advanced by the appellants on account of the respondents` vessel, Ohm Mariana, allowed the counterclaim of the respondents for an account to be taken and inquiries to be made and ordered the appellants to pay damages for having wrongfully arrested the vessel. His decision was reported in [1992] 2 SLR 623 .

The appellants are a company incorporated in Singapore and engaged in shipping business.
The principal shareholders of the company are husband and wife, Bernt Forsell and Doreen Ng, and both of them are directors of the company. Doreen Ng herself is an advocate and solicitor of the Supreme Court of Singapore practising under the name of Ng & Company and is also the secretary of the company. The respondents are Ohm Pacific Sdn Bhd, a company incorporated in Malaysia.

Bernt Forsell (`Forsell`) had had business dealings for some years with a Malaysian by the name Halim bin Mohammad (`Halim`) whose company, Ohm Pacific Sdn Bhd, booked cargoes as agent for the appellants.
In early 1982, Forsell and Halim agreed to form a joint venture company for the purpose of purchasing a vessel to carry rice from Bangkok to Malaysian ports. There were fiscal advantages in operating the vessel under the Malaysian flag. Accordingly, the respondent company was incorporated in Malaysia as the vehicle for their joint venture, and 51% of the shares of the company were allotted to Halim and his two Malaysian friends, Osman bin Abdullah and Mazmin bte Noordin, and the balance of 49% to Forsell and Doreen Ng. Notwithstanding this difference in the allotments, it appeared that each side was to have an equal interest in the respondent company and that Halim would hold 1% of the shares as nominee for Forsell.

On 18 May 1984, the respondents agreed to purchase a vessel, Peony, from Limerick Shipping Ltd of Hong Kong intending to register her in Malaysia.
The purchase price was US$720,000 of which 10% was paid to the purchaser as a deposit, and completion of the purchase was scheduled to take place at the end of June 1984. Halim was to procure finance for payment of the balance of the purchase price from a Malaysian bank, Bank Pembangunan (`the bank`). However, he was not successful in procuring it prior to the time fixed for completion because certain conditions imposed by the bank had not been satisfied. To avoid a forfeiture of the deposit, the appellants paid the balance of the purchase price and completed the purchase in their name. On or about 28 June 1984, the vessel was registered in the name of the appellants as the owners with the Registry of Ships in Singapore. On the same day, the board of directors of the respondents passed the following resolutions:

(1) That the company accept a temporary loan of US$800,000 to complete the purchase of mv `Peony` refer memorandum of agreement dated 18 May 1984.

(2) That the company will reimburse Pacific Navigation Co Pte Ltd interest on the sum of US$800,000 at the rate of 2% pa above the New York prime rate from the date of disbursement of the loan until the date of actual full repayment thereof and all expenses incurred in respect of the loan.

(3) That as security for the loan and all moneys payable thereunder the company agree and nominate Pacific Navigation Co Pte Ltd to purchase and register the legal ownership in the vessel in the name of Pacific Navigation Co Pte Ltd on the undertaking of Pacific Navigation Co Pte Ltd to execute and deliver to the company a legal bill of sale on full repayment of the loan and all moneys payable thereunder.

(4) That Mr Halim Mohammad be hereby authorized to sign all documents relating to the aforesaid.

Thus, it was intended that the appellants should hold the vessel as security for the loan and other moneys owing to them from the respondents; the beneficial ownership of the vessel remained vested in the respondents.

After the purchase the appellants operated the vessel with a Malaysian crew recruited by Halim.
In October 1984, preparations were made to register the vessel in Malaysia so that she could be used to carry rice for the Malaysian Rice Board. The appellants required the following to be complied with prior to registration of the vessel in Malaysia, namely, (i) execution by the respondents of an agreement appointing the appellants as the sole managing agents of the vessel in Singapore; (ii) execution by the respondents of a charterparty of the vessel to Australasia Bulk Shipping Pte Ltd; (iii) execution by Halim of a power of attorney in favour of Doreen Ng; and (iv) execution by Halim of a trust deed in favour of Forsell in respect of 1% of the shares in the respondent company. On 18 October 1984, Halim on behalf of the respondents executed the management agreement and the charterparty in the presence of Doreen Ng in Singapore.

On 19 October 1984 the vessel was placed on the Malaysian flag under a provisional registration in the respondents` name and was renamed Ohm Mariana (`the vessel`).
Subsequently, Halim signed the power of attorney in favour of Doreen Ng and also the trust deed in favour of Forsell. In the meanwhile, Halim had continued his efforts to procure the finance from the bank and eventually he succeeded. The bank released RM1,725,000 in December 1984 to Ng & Company, the appellants` solicitors, on the latter`s undertaking to forward to the bank`s solicitors the bill of sale of the vessel and the deletion certificate evidencing the vessel`s deregistration from the Singapore Registry of Ships. Ng & Company by a telex dated 14 December 1984 confirmed to the respondents that they had received the money and that they would send the appellants` statement of account shortly and also forward the bill of sale and the deletion certificate. In February 1985 the operation of the vessel changed hands from the appellants to the respondents. However, up to that time, Ng & Company had not delivered the documents as promised in spite of reminders from the bank`s solicitors. Finally, the bank`s solicitors wrote to the appellants and to Ng & Company threatening to institute legal action and to lodge a police report if the documents did not arrive soon. In a separate letter to Doreen Ng they said, among other things, that a complaint against her would be made to the Law Society of Singapore. Ng & Company thereupon instructed a firm of solicitors who then delivered the documents to the bank`s solicitors around 12 April 1985. With these documents the ship was permanently registered in the Malaysian Registry of Ships on 15 April 1985 in the name of the respondents. On 15 April 1985 a ship mortgage was created in favour of the bank to secure the loan of RM1,725,000 with interest thereon and the instrument of mortgage was registered on the following day.

Differences arose between the appellants and the respondents, and on 19 September 1985 the appellants instituted an action in rem against the vessel claiming a sum exceeding S$300,000 in respect of disbursements made by them as agents for and on behalf of the respondents on account of the vessel, and claiming also agency and other fees and commission, interest and costs.
In the affidavit which led to the warrant of arrest the secretary of the appellants affirmed that the appellants as agents for the respondents had at the request of the respondents incurred disbursements, commissions and other fees exceeding S$300,000, particulars of which had been delivered to the respondents. The warrant of arrest was issued and the vessel on calling at Singapore was arrested.

In view of the decision below, it is necessary to refer in some detail to the pleadings filed by the parties.
In their statement of claim the appellants averred that pursuant to a management agreement made between the appellants and the respondents, the appellants had rendered services, expended large sums of money and made advances and disbursements on account of the vessel at the request of the respondents, their servants and/or agents. The particulars of the alleged payments were as follows:

(1) Payment for purchase, registration, survey and docking expenses, purchases of bunkers, lube oil, engine stores, deck stores, port costs, incidentals etc S$ 1,175,004.85

(2) Remittances to agents for disbursements at various ports S$ 252,427.29

(3) Payment for banker`s guarantee in favour of Bank Pembangunan Malaysia Bhd (RM$250,000) S$ 225,679

Total: S$ 1,653,111.14

They also pleaded that as managing agents for the vessel they had received on behalf of the respondents freights totalling S$1,111,704.33, and after deducting this amount, the balance due and owing from the respondents was S$541,406.81.
That was the amount the appellants claimed.

In their defence, the respondents admitted that on or about 18 October 1984 the appellants and the respondents entered into a management agreement; that the appellants as managing agents for the respondents had received on behalf of the respondents large sums of moneys by way of freight `during the aforesaid period`, and that the appellants had rendered services, expended sums of money and made advances of disbursements on account of the vessel for `the aforesaid period`.
No particular period of time in which the appellants as managing agents received moneys by way of freight and made advances of disbursements on account of the vessel was pleaded. Presumably, the period was from 18 October 1984 to 15 February 1985 as apparent from the counterclaim. The respondents averred that there was due and owing to them from the appellants by way of money had and received by the appellants on behalf of the respondents an amount of not less than S$307,001.13, and denied that they were liable to pay to the appellants any sum by way of disbursements and/or agency fees or at all. The respondents therefore counterclaimed (i)...

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