The "Ohm Mariana" ex "Peony"

JudgeG P Selvam JC
Judgment Date11 March 1992
Neutral Citation[1992] SGHC 57
Docket NumberAdmiralty in Rem No 566 of 1985
Date11 March 1992
Published date19 September 2003
Plaintiff CounselC Arul and Yoga Yogarajah (C Arul & Partners)
Citation[1992] SGHC 57
Defendant CounselK Parasuram (Param & Partners)
CourtHigh Court (Singapore)
Subject MatterCosts,Admiralty jurisdiction and arrest,Lack of admiralty jurisdiction,Defendants not entitled to costs,Whether plaintiffs' claims were 'claims by [an] agent in respect of disbursements made on account of a ship',Words and Phrases,Whether plaintiffs had basis to invoke admiralty jurisdiction in rem against vessel,Claim by plaintiffs for agents' disbursements,Counterclaim by defendants for damages for wrongful arrest,s 3(1)(o) High Court (Admiralty Jurisdiction) Act (Cap 123),Jurisdiction points should have been raised by defendants at outset,Action in rem,'Owner',Whether arrest was an act of mala fides or crassa negligentia,Claim for agents' disbursements,ss 3 & 4 High Court (Admiralty Jurisdiction) Act (Cap 123),Counterclaim by defendants for damages for wrongful arrest of vessel successful,Admiralty and Shipping,Arrest of vessel,Whether High Court had admiralty jurisdiction over matter,'Claims by [an] agent in respect of disbursements made on account of a ship',s 4(4) High Court (Admiralty Jurisdiction) Act (Cap 123),Whether defendants were 'owners' within meaning of s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123)

Cur Adv Vult

The plaintiffs are a Singapore incorporated company engaged in the shipping business. The principal shareholders and officers of the plaintiffs are Mr Bernt Forsell and his wife, Mdm Doreen Ng (`the Singapore side`). The latter is an advocate and solicitor of the Supreme Court of Singapore.

In early 1982 the Singapore side wished to form a joint venture with their Malaysian family friends, Halim bin Mohammad, Osman bin Abdullah and Mazmin bte Noordin (`the Malaysian side`) for the purpose of purchasing a vessel and operating her under the Malaysian flag.
There were fiscal advantages in operating the vessel under the Malaysian flag. For this purpose, it was necessary to form a Malaysian limited company. Ohm Pacific Sdn Bhd, the defendants, were incorporated to serve as the vehicle for the joint venture. The Malaysian side was allotted 51% of the shares, and the Singapore side, the balance. Notwithstanding this, each side was to have an equal interest in the defendants. Bernt Forsell in the main represented the Singapore side. Halim Mohammad, who was appointed the managing director, represented the Malaysian side.

On 18 May 1984 the defendants agreed with Limerick Shipping Ltd of Hong Kong to purchase the mv Peony which eventually was intended to be registered in Malaysia.
The purchase price was US$720,000. As a deposit, 10% of the purchase price was paid to the sellers. The two sides contributed equally to the deposit. The purchase was to be completed by the end of June 1984. Halim Mohammad was to procure the finance for the balance of the purchase price from Bank Pembangunan (`the bank`). He was unable to procure it within the time stipulated to complete the purchase of the Peony because certain conditions imposed by the bank were not satisfied. According to Halim Mohammad, the Singapore side failed to furnish a guarantee. To avoid forfeiting the deposit amount, the purchase was completed by the plaintiffs who funded the balance of the purchase price and became the owners. On 28 June 1984 the mv Peony was registered in Singapore with the plaintiffs as proprietors. The defendants passed a resolution dated the same day to accept a temporary loan of US$800,000 from the plaintiffs to complete the purchase. The resolution declared that the defenwould pay interest on the loan and that the vessel would be registered in the legal ownership of the plaintiffs as security for the loan. The resolution further stated that upon repayment of the loan and other moneys due to the plaintiffs, the ship was to be transferred to the defendants.

Thus, in order to complete the purchase and make the ship operative, the plaintiffs advanced considerable sums of money.
From the time of purchase the plaintiffs, with the consent of the defendants, were the registered owners and also had possession and control of the ship.

In October 1984 the parties prepared to give effect to the original intention of placing the ship on the Malaysian register under the ownership of the defendants so that they could carry rice cargo for the Malaysian Rice Board.
The plaintiffs, however, were not prepared to allow the ship to be on the Malaysian register unless the defendants and Halim Mohammad executed certain documents prepared on behalf of the plaintiffs. The documents were: (i) a management agreement in favour of the plaintiffs, (ii) a charterparty in respect of the ship between the defendants and Australasia Bulk Shipping Pte Ltd, (iii) a power of attorney in favour of Doreen Ng, and (iv) a trust deed by Halim Mohammad in favour of Bernt Forsell in respect of one percentum of the shares in the defendants. On 18 October 1984 Halim Mohammad, for his part, executed the first two documents without dating them. Admittedly, Bernt Forsell and Doreen Ng had an interest in Australasia Bulk Shipping Pte Ltd.

On 19 October 1984 the ship was placed on the Malaysian flag under provisional registration under the name of the defendants.
The ship was named Ohm Mariana. The plaintiffs, however, retained control of the ship.

In the meantime, Halim Mohammad continued with his efforts to procure the finance from the bank.
In the result, the bank released M$1.725m in 1984 to Ng & Co, the plaintiffs` solicitors. Doreen Ng practised law under the name and style of Ng & Co. Ng & Co, by a telex sent on 14 December 1984, confirmed that they had received the money and that they would send their clients` statement of account shortly. They also promised to send the defendants a bill of sale in respect of the ship and a deletion certificate evidencing the ship`s deregistration from the Singapore Registry of Ships. The bill of sale would transfer legal ownership to the defendants. On 19 December 1984 Yacob & Rakan Rakan, the bank`s solicitors, wrote to Ng & Co, confirming that `the bank had disbursed the sum of M$1.725m upon your undertaking to forward to us the deletion certificate and the bill of sale`.

In February 1985 the operation of the ship changed hands from the plaintiffs to the defendants.
Even so, the promise to send the bill of sale and deletion certificate was not fulfilled. The bank waited for these documents with a growing sense of anxiety as no mortgage in favour of the bank could be executed and registered in Malaysia without them. Reminders for the transfer documents produced no result. On 27 March 1985 Yacob & Rakan Rakan, in exasperation, wrote directly to the plaintiffs, informing them that the money had been released by the bank against an undertaking by Ng & Co to produce the transfer documents, and warned that if the documents were not received by them they would institute legal action and lodge a police report. A similarly worded letter was sent to `Doreen Ng practising under the name and style of Ng & Co`. In the letter they added that a complaint against Doreen Ng to the Law Society of Singapore would be lodged. Thus a clear fault line had developed between the two sides. Before it developed into something untoward, Ng & Co retained solicitors who, without accepting that there was a solicitor`s undertaking by Ng & Co, handed over the bill of sale and the deletion certificate to the bank`s solicitors in Kuala Lumpur. With these documents, the ship was permanently registered with the Malaysian registry on 15 April 1985 under the name of Ohm Mariana in the ownership of the defen. On 16 April 1985, a ship mortgage to secure the loan amount of M$1.725m and interest was created and the instrument of mortgage was registered at Port Klang the following day. Thus the defendants became registered owners of the ship in the true sense of that expression and also had possession and control of the ship.

In these circumstances, the ship called at Singapore.
The defendants had appointed Jardine and not the plaintiffs to attend to the vessel as agents. The plaintiffs were not pleased. They manifested their displeasure by arresting the ship on 20 September 1985, asserting a claim for agents` disbursements.

The claim indorsed in the writ was for `a sum exceeding $300,000 in respect of disbursements made by them as agents and other fees and commission`.
In the affidavit to lead the warrant of arrest, the secretary of the plaintiffs affirmed that `the plaintiffs as the agents for the defendants have at the request of the defendants incurred disbursements, commission and other fees exceeding $300,000 particulars of which have been rendered to the defendants`.

The plaintiffs filed a statement of claim on 21 October 1985, alleging that pursuant to a management agreement they had rendered services, expended large sums and made advances and disbursements amounting to $1,653,111.14 and gave the following breakdown:

(1) Payment for purchase, registration, survey and docking $1,175,004.85

expenses, purchases of bunkers, lube oil, engine stores,

deck stores, port costs, incidental etc

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

(3) Payment for banker`s guarantee in favour of Bank $ 225,679.00

Pembangunan Malaysia Bhd (M$250,000)

Total: $1,653,111.14

The plaintiffs then said that they had received freight amounting to $1,111,704.33, leaving a balance of $541,406.81.

The defendants admitted that they had entered into a management agreement, that the plaintiffs had received large sums of freight and that the plaintiffs had rendered services, expended moneys and made advances on account of the ship, but denied owing any moneys to the plaintiffs.
The defendants further claimed that there was a sum of at least $307,001.13 owing from the plaintiffs to the defendants by way of moneys had and received by the plaintiffs on behalf of the defendants.

The defendants made a counterclaim against the plaintiffs for (i) moneys had and received by the plaintiffs, (ii) an account of all moneys of the defendants with the plaintiffs for the period from 18 October 1984 to 15 February 1985, and (iii) an inquiry into the moneys due to the defendants.
They also claimed damages for wrongful arrest of the defendants` ship. The ship was sold pursuant to an order of court for $1.55m. The bunkers were sold separately for $56,936. The sale proceeds were paid into court. Subsequently claims were made against the proceeds of sale by various claimants, including the bank. There now remains in court $36,417.23 to the credit of this action.

Admiralty jurisdiction

The admiralty jurisdiction of the High Court of Singapore is essentially statutory, namely, the jurisdiction conferred on the High Court by the High Court (Admiralty Jurisdiction) Act (Cap 123) (`the Act`). The Act lays down the conditions which must be satisfied before a claimant avails himself of the right to institute in rem proceedings against a ship and the powerful right to effect an arrest of the ship. As the in rem jurisdiction is created and limited by statute, the parties cannot confer such jurisdiction by agreement or waiver.

The basic condition for jurisdiction is that the

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