The Rainbow Spring

• Court: High Court (Singapore)
• Judge: Belinda Ang Saw Ean JC
• Judgment Date: 29 October 2002
• Neutral Citation: [2002] SGHC 255
• Citation: [2002] SGHC 255
• Defendant Counsel: Toh Kian Sing and Loh Wai Yue (Rajah & Tann)
• Plaintiff Counsel: Magdalene Chew (Joseph Tan Jude Benny)
• Published date: 19 September 2003
• Docket Number: Admiralty in Rem No 600391 of 2001
• Date: 29 October 2002
• Subject Matter: Whether arrest of vessel should be set aside on ground of non-disclosure of material facts,Whether arrest obviously groundless as to amount to mala fides or crassa negligentia implying malice,Action in rem,Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 70 r 4,Civil Procedure,Court's discretion in setting aside warrant of arrest on ground of material non-disclosure,Admiralty and Shipping,Whether defendant liable in personam for claim,High Court (Admiralty Jurisdiction) Act (Cap 123, 1985 Rev Ed) ss 3(1)(h), 4(4),Wrongful arrest,Whether s 4(4) of the High Court (Admiralty Jurisdiction) Act satisfied,Admiralty jurisdiction and arrest,Ex parte application to set aside warrant of arrest of vessel,Full and frank disclosure

Judgment

GROUNDS OF DECISION

1. By a time charterparty dated 8 January 1998, Admiral Chartering Ltd ("Admiral"), a Liberian incorporated company, chartered the "RAINBOW SPRING" on an amended New York Produce Exchange Form. The present dispute stems from a May 2002 voyage charter whereby Admiral as disponent owner sub-chartered the "RAINBOW SPRING" to International Coffee and Fertilizer Trading Co ("INCOFE"). A consignment of crystalline potassium nitrate shipped on board the "RAINBOW SPRING" in June 2000 at Tocopilla, Chile for carriage to and delivery at Puerto Caldera, Costa Rica and Puerto Quetzal, Guatemala had sustained wet damage. INCOFE consequently commenced arbitration in New York against Admiral for damages.

2. On 31 October 2001, Admiral as Plaintiff commenced an action in rem against the vessel "RAINBOW SPRING". The Plaintiff’s claim is for damages for breach of time charterparty and/or for an indemnity against all losses should Admiral be found liable to INCOFE for wet damage to its cargo. The writ was served on "RAINBOW SPRING" and she was at the same time arrested in Singapore on 31 December 2001. Security was provided by West of England Ship Owners Mutual Insurance Association (Luxembourg) as P&I Club on behalf of its member, Rainbow Spring Shipping Limited Inc ("RSSL"), a Panamanian company. The vessel was released on 3 January 2002.

3. The Plaintiff’s case is that the time charter of the "RAINBOW SPRING" was from the outset made with RSSL as registered owner. The Plaintiff is entitled to proceed by way of an action in rem against the vessel because RSSL is the person who would be liable on the claim in an action in personam, and because RSSL is the owner of the vessel, both when the cause of action arose and when the action is brought.

4. RSSL as Defendant entered an appearance and on 14 January 2002 applied to set aside the writ of summons and warrant of arrest. RSSL’s contention is that the in personam requirement of s4(4) of the High Court (Admiralty Jurisdiction) Act (cap 123) is not satisfied. RSSL was not a party to the time charter of the "RAINBOW SPRING". The contracting parties were the Plaintiff and Oriental Shipway Inc ("Oriental"). An alternative ground put forward to set aside the warrant of arrest is non-disclosure of material facts.

5. The Assistant Registrar, who heard the application on 25 March 2002, declined to set aside the in rem writ. However, the warrant of arrest was set aside on the ground of non-disclosure of material facts. The Assistant Registrar also ordered damages for wrongful arrest to be assessed.

6. Both parties appealed against her decision. Further affidavits were filed after the hearing before the Assistant Registrar. All in all, a total of 13 affidavits were filed before and at the appeal stage. Within the affidavits the opposing contentions of the parties are found.

The Defendant’s Appeal

(i) The jurisdictional issue - In personam test in s4(4) of the Act

7. It is common ground that the claim falls within s3(1)(h) of the Act. It is also common ground that the court only has jurisdiction to entertain an action in rem if the Plaintiff satisfies s4(4) of the Act.

8. It is not in dispute that the burden is on the Plaintiff to establish that RSSL is the likely person to be liable in personam on the claim. As to the standard of proof, Selvam JC (as he then was) in The "Opal 3" [1992] 2 SLR 585 stated that in applying the in personam test in s4(4) of the Act, all that is needed is an arguable case. See The "St Elefterio" [1957] 1 Lloyd’s Law Rep 283 and The "Wigwam" [1982-1983] SLR 188. Justice Chua’s decision in The "Wigwam" was affirmed by the Court of Appeal. (See unreported decision dated 14 September 1984 in Civil Appeal no. 89 of 1982). Admiral has only to show that it has an arguable case, even though it may have a difficult case in fact or law. If the Plaintiff discharges the burden, the action would proceed to trial.

9. The sole question, which I have to consider, is whether it is arguable that RSSL would be liable in personam. If the plaintiff’s case on jurisdiction is plainly unarguable in that it is bound to fail, the in rem writ would be set aside. The present case is no different from the rest where the substance of the underlying claim is factually inseparable from the basis of jurisdiction.

10. Counsel for the Defendant, Mr. Toh Kian Sing, urged the court to adopt the robust approach taken in The "AA V" [2001] 1 SLR 207 where 15 affidavits were filed. Judith Prakash J said:

"….if the evidence before me convincingly established that the defendants were not party to those contracts then I would have to hold at this early stage that the admiralty jurisdiction of the court had not been properly invoked." [p218]

11. On the first page of the charterparty, Oriental is named as ‘Owners" of the "RAINBOW SPRING". The "owning company" is stated to be Oriental in the Description Clause (Clause 74) which incorporated Charterer’s completed Questionnaire. On page 3, there is a company stamp of RSSL where Tam Kwong Lim("Tam"), who is president and director of RSSL, had signed the document on behalf of RSSL. The signature of Tam as RSSL representative/director viewed in isolation is unqualified.

12. Counsel for the Plaintiff, Ms Magdalene Chew, advances the proposition that a party who signs a contract in his own name is deemed to have contracted personally unless it is clear he executed it as agent only. The general principle is set out in Scrutton on Charterparties (20^th Edition) Art 19 p45:

"Where a person signs the charter in his own name without qualification, he is prima facie deemed to contract personally and, in order to prevent this liability from attaching, it must be clear from the other portions of the charterparty that he did not intend to contract personally."

13. Counsel further submits that if nonetheless there is ambiguity on the face of the charterparty as to identity of the contracting party, extrinsic evidence is admissible as an aid in identifying the contracting party: Chitty on Contracts (28^th ed) Vol. 1 12-120.

14. Ms Chew said that on construing the entire document, RSSL was clearly the contracting party. Ms Chew referred me to some of the clauses in the charterparty. For example, Clause 72 which provides:

"Owners to have the option to sell the vessel together with charterparty subject to Charterer’s approval of new ownership, which should not be unreasonably withheld."

The Defendant is the only party who would have the right to "sell" the vessel. Therefore, the word "Owners" in Clause 72 is clearly referable to the Defendant as registered owner of the vessel and not Oriental.

15. Clause 40 states that West of England is "Owners’ P&I Club". Again the word "Owners" there is referable to RSSL. During negotiations for the charter, West of England had at the behest of RSSL commented on the terms of the charter. West of England also handled the off-hire dispute and dispute over prices of bunkers applicable at time of redelivery. Furthermore, West of England communicated with the Plaintiff on these disputes as if the charter was with RSSL. West of England only disclosed that Oriental was not its member at the setting aside stage.

16. There are some documents emanating from the Defendant which showed the time charterparty dated 8 January 1998 to be between Admiral and RSSL. For example, the Notice of Assignment of earnings dated 29 April 1999 was addressed to Admiral and signed by Tam for RSSL.

17. Woo Man Fong ("Woo"), the general manager of the Defendant, asserts in his affidavit that the Defendant’s rubber stamp on the charterparty was due to a clerical mistake. Kingstar Shipping Ltd ("Kingstar"), the vessel’s agent, kept the Defendant’s rubber stamp in its office and the wrong stamp was used.

18. Woo also asserts that the Plaintiff was fully aware at the time of the arrest that the contracting party was Oriental. He cites in support the Plaintiff’s voyage instruction to the master dated 22 April 1998 where Oriental was expressly referred to as head owner and Admiral as time charterer. The Notice of Assignment of...