The "Skaw Prince"

• Jurisdiction: Singapore
• Judge: Amarjeet Singh JC
• Judgment Date: 26 January 1994
• Neutral Citation: [1994] SGHC 18
• Date: 30 July 1994
• Subject Matter: One-ship companies,Test for arrest,Admiralty and Shipping,"Beneficial ownership",Principles to be applied in determining beneficial ownership,Admiralty jurisdiction and arrest,In personam and in rem test,Words and Phrases,Action in rem,Circumstances in which the veil should be lifted,Meaning of beneficial ownership,Arrest of ship,Companies,Lifting corporate veil,Incorporation of companies
• Docket Number: Admiralty in Rem No 478 of 1992
• Published date: 19 September 2003
• Defendant Counsel: Muthu Arusu (Drew & Napier)
• Court: High Court (Singapore)
• Plaintiff Counsel: Goh Kok Leong (Ang & Pnrs)

This action raised issues as to the lifting of the corporate veil in respect of one-ship companies, their beneficial ownership and consequently the resulting question of establishing in personam and in rem liability.

The plaintiffs, a Swiss company, are a subsidiary of Marc Rich & Co AG (Marc Rich). Under a time charterparty dated 15 July 1991, the mt Skaw Princess was on time charter to March Rich. On or about 24 October 1991, the time charter was assigned by Marc Rich to the plaintiffs. The registered owners of the vessel named in the charterparty were Corsair Holdings Inc (Corsair), a Liberian corporation and, as such owners, Corsair entered the time charterparty as principals. Skaw Princess was redelivered by the plaintiffs to Corsair in May 1992. The plaintiffs` claim was that a balance of approximately US$240,000 was due to the plaintiffs as charterers on account of bunkers on redelivery, overpaid hire and owners` disbursements and other charges and commission. It was directed to Wind Shipping A/S who were managers of Corsair and was referred to as `for owners account`.

As the plaintiffs` claim was unsatisfied, they instituted two proceedings, the first of which was on about 10 July 1992 at Curacao as a result of which the plaintiffs arrested the Skaw Princess. In their petition filed at Curacao relating to the arrest the plaintiffs cited Corsair as `the owner of the ship Skaw Princess and repeated that the plaintiffs looked towards Corsair for satisfaction of their claim on the basis of the charter of Skaw Princess. The plaintiffs were however unsuccessful in recovering their claim or any part of it as Skaw Princess was also arrested by a bank, Forstasparebanken, to whom it had been mortgaged and the value of the vessel was found to be less than the amount owed to the mortgagee.

The plaintiffs thereafter commenced proceedings in Singapore on 27 August 1992 in respect of the same claim and caused the vessel Skaw Prince of the Port of Oslo to be arrested in Singapore under a warrant of arrest on the ground this time that Skaw Shipping A/B, a Swedish company were the persons who would, apart from s 5 of the High Court (Admiralty Jurisdiction) Act (Cap 123), be liable to the plaintiffs in an action in personam when the cause of action arose being the owners or persons in possession or control of the vessel Skaw Princess and were also at the date of the issue of proceedings herein, the true beneficial owners of the Skaw Prince as respects all the shares therein.

The defendants successfully set aside the warrant of arrest and the proceedings saying that the plaintiffs had no legal basis for stating that the person who would be liable in personam for the alleged claim arising from the charterparty was Skaw Shipping A/B and that the plaintiffs` allegations that Skaw Shipping were the owners or the persons in possession or control of Skaw Princess or that they were beneficial owners of the vessel at the date of the commencement of the proceedings were unfounded. The claim if any, according to the defendants, was against Corsair which were the registered owners of Skaw Princess since 1989. Further, the registered owners of Skaw Prince, also since 1989, was another company, Filey International Inc (Filey). The defendants` further application for damages for the wrongful arrest and detention of the aforesaid defendants` ship was, however, refused. Whilst the plaintiffs appealed against the assistant registrar`s decision in setting aside the warrant of arrest and the writ of summons and all subsequent proceedings, the defendants appealed against his order refusing damages for the wrongful arrest and detention of the defendants` ship Skaw Prince, such damages to be assessed by the registrar.

I affirmed the assistant registrar`s decisions and the plaintiffs alone now appeal against my decision in respect of which I give my grounds of decision.

The following essential facts were undisputed by both counsel:

(1) The registered owner of Skaw Princess since 1989 was Corsair.

(2) Skaw Princess was managed by Wind Shipping A/S, the managers.

(3) The registered owner of Skaw Prince since 1989 was Filey, also a Liberian company.

(4) Corsair and Filey issued only one bearer share each.

(5) Corsair and Filey were 100% owned by Pontina A/S, a Norwegian company.

(6) Pontina A/S was in turn 100% owned by Skaw Shipping A/B, the Swedish company already referred to.

(7) In October 1991 there was a loan agreement made between Oslobanken A/S of Norway (the bank) as lender and Skaw Shipping A/B as borrower for US$6,010,647. As a result second mortgages of both vessels Skaw Princess and Skaw Prince were created in favour of the bank under two separate ship mortgage deeds.

(8) The loan instruments created an assignment of Skaw Princess and Skaw Prince in favour of the bank and all earnings in respect of the charter of the vessels were assigned and payable to the bank.

(9) Under separate `pledge of shares` agreements Pontina also pledged all the shares of Corsair and Filey to the Bank.

(10) The loan agreement between Skaw Shipping A/B and the bank was signed by Per Olav Karlsen (Karlsen) on behalf of Skaw Shipping A/B and also on behalf of Corsair and Filey. Karlsen was the common director of each of the aforesaid companies and managing director of Skaw Shipping A/B.

(11) Skaw Shipping A/B went bankrupt on 30 June 1992. A report dated 26 February 1993 relating to the bankruptcy was filed by the administrators and receivers in the bankruptcy entitled `Concerning Skaw Shipping A/B in Bankruptcy` (the receivers` report) after they were commissioned to investigate and report on the insolvency.

Although it is not an agreed fact, I might add that in respect of para 8, the plaintiffs had written notice dated 24 October 1991 from Corsair of the assignment of earnings in relation to the vessel Skaw Princess.

In addition to the above facts and agreed facts, the plaintiffs further referred to their affidavit evidence to show that Skaw Shipping A/B was liable on their claim as follows:

(a) A default notice dated 19 August 1992 sent by Sparbanken addressed to Skaw Shipping A/B pursuant to the loan agreement made on 30 March 1990 (which included the instrument of pledge, general conditions - mortgages on vessels and the ship mortgage deed) required Skaw Shipping A/B to retain possession of the vessel, Skaw Princess to maintain its security pending a decision by the bank as to the disposal of the said vessel. On a decision being taken, Skaw Shipping A/B would be required to sign a transfer of the vessel either to the bank or the party nominated by the bank.

(b) The receivers` report further evidenced that Skaw Shipping A/B had intended to sell Skaw Prince and Skaw Princess as shown in its projected plan for the third quarter of 1991.

(c) The Oslobanken loan to Skaw Shipping A/B was taken out to finance the purchase of shares in another company, Skaw Shipping A/S, and was not for buying or operating the Skaw Prince or Skaw Princess.

In this connection Skaw Shipping A/B/Pontina A/S drew no distinction whatever between Corsair, Filey or Skaw Prince or Skaw Princess.

(d) The notice of assignment of Skaw Princess charter-hire was signed by Karlsen - the managing director of Skaw Shipping A/B.

(e) Karlsen was involved in every level of control in Corsair, Filey, Pontina A/B, Skaw Shipping A/B and Wind Marine A/S. His fax dated 26 June 1992 on behalf of Corsair Holding on Wind Marine`s letterhead to Credit Lyonnais showed and as such there was no real distinction between the several corporate entities in the Skaw Group.

(f) The name `Skaw` was additional evidence of beneficial ownership by Skaw Shipping A/B.

(g) That Filey and Corsair did not have independent existence and no evidence was adduced by the defendants that these companies maintained their own accounts and records, although Karlsen asserted otherwise in para 39 of his affidavit filed on 25 January 1994.

Jurisdiction having been established that the plaintiffs` claim fell within s 3(1)(l) and (o) of the High Court (Admiralty Jurisdiction) Act (Cap 123) (the Act) the burden remained on the plaintiffs to further satisfy the essential requirements of s 4(4) of the Act which states:

In the case of any such claim as is mentioned in section 3(1)(d) to (q), being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of the action arose, the owner or charterer of, or in possession or in control of, the ship, the admiralty jurisdiction of the Court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

(a) that ship if at the time when the action is brought it is beneficially owned as respects all the shares therein by that person; or

(b) any other ship which, at the time when the action is brought, is ...