The "Vasiliy Golovnin"

• Judge: Chan Sek Keong CJ
• Judgment Date: 19 September 2008
• Neutral Citation: [2008] SGCA 39
• Plaintiff Counsel: Vivian Ang, Yap Fook Ken and Kimarie Cheang (Allen & Gledhill LLP),Steven Chong SC and Gary Low (Rajah & Tann LLP)
• Published date: 03 October 2008
• Year: 2008
• Subject Matter: Duty of full and frank disclosure,Duty to make full and frank disclosure,Civil Procedure,Extent of disclosure of material facts in ex-parte hearings,Wrongful arrest,Admiralty and Shipping,Disclosure of material facts,Requirements for determining whether claim fell within s 3(1) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed),Admiralty jurisdiction and arrest,Arrest of vessel,Arrest in pursuance of arbitration proceedings,Damages for wrongful arrest,Action in rem
• Citation: [2008] SGCA 39
• Court: Court of Three Judges (Singapore)

19 September 2008 Judgment reserved.

V K Rajah JA (delivering the judgment of the court):

Introduction

1 Admiral Vasiliy Mikhaylovich Golovnin[note: 1] was an 19th century Russian navigator and explorer. In 1819, while attempting to survey one of the Kuril Islands, sandwiched between Russia and Japan, he was apprehended by the Japanese. As the Kuril Islands were then the subject of rival sovereignty claims by both countries, Admiral Golovnin was promptly accused by the Japanese of having strayed too close to the island. He spent the next two years languishing in a Japanese prison as there were then no established international conventions on how to deal with such transgressions.

2 Almost 200 years later, a vessel named after him, the Vasiliy Golovnin, owned by the respondent, has been caught in the middle of an international legal melee, spanning several jurisdictions. As a result of an alleged contractual default by its sister ship, it was arrested in Singapore. Fortunately, in accordance with established Singapore shipping practice, it was promptly released after security was provided. The issues in these appeals, while having little apparent historical or political significance, are nevertheless of considerable commercial importance to the parties involved. Is the Vasiliy Golovnin an innocent party in the middle caught up in a legal muddle or do its owners have legal responsibility for failing to comply with the instructions of the appellant (qua consignee)? For ease of reference and to facilitate understanding, we now set out the schematic arrangement of this judgment:

Introduction........................................................................................	1
Overview...........................................................................................	3
The appeals........................................................................................	4
Background facts...............................................................................	5
The decision of the Judge....................................................................	12
CA 109/2007.....................................................................................	13
Sustainability of the cause of action............................................	14
The so-called arbitration agreement.................................	16
Requirements for determining whether a claim falls; within section 3(1) of the HCAJA...................................	21
Crédit Agricole’s substantive claim..................................	25
Material non-disclosure.............................................................	38
Duty to make full and frank disclosure.............................	40
The content/scope of disclosure.......................................	42
The threshold of disclosure..............................................	46
Non-disclosure of the inter partes hearing in Lomé...........	48
Non-disclosure of the proposed “switch” of the bills; of lading.........................................................................	51
Synopsis.........................................................................	53
Issue estoppel...........................................................................	55
CA 110/2007.....................................................................................	55
The test of wrongful arrest........................................................	56
The Evangelismos test....................................................	56
Some perceived problems with the Evangelismos test.......	62
The rationale behind the Evangelismos test........................	66
The proper application of the Evangelismos test................	75
Whether damages for wrongful arrest should be awarded; to FESCO..................................................................................	79
Absence of any reasonable basis.......................................	81
Material non-disclosure....................................................	84
Synopsis..........................................................................	85
Conclusion..........................................................................................	88

Overview

3 Crédit Agricole (Suisse) SA (“Crédit Agricole”), the appellant in Civil Appeal No 109 of 2007 (“CA 109/2007”), and Banque Cantonale de Genève SA (“BCG”) (collectively “the Banks”) arrested a vessel, the Chelyabinsk, in Lomé, the capital of Togo, on 21 February 2006. Acceding to a setting-aside application by Far Eastern Shipping Co Plc (“FESCO”), the Lomé Court of First Instance ordered that the vessel be released on 24 February 2006. Dissatisfied with this outcome, the Banks, not long after, moved to arrest her sister ship, the Vasiliy Golovnin, in Singapore on 18 March 2006, pursuant to the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (“HCAJA”), on the same basis as the arrest of the Chelyabinsk.

4 On 10 July 2006, FESCO, the respondent in CA 109/2007, the owners of the two vessels, persuaded Assistant Registrar Ang Ching Pin (“AR Ang”), to set aside the warrant of arrest of the Vasiliy Golovnin and strike out the Banks’ writ of summons. AR Ang, however, did not award FESCO any damages arising from the wrongful arrest of the Vasiliy Golovnin.

5 The Banks appealed against AR Ang’s decision (The Vasiliy Golovnin [2006] SGHC 247) (“AR Ang’s GD”) to set aside the arrest warrant in Registrar’s Appeal No 214 of 2006 (“RA No 214”) to a High Court judge (“the Judge”). FESCO also concurrently appealed against AR Ang’s decision not to award damages for wrongful arrest in Registrar’s Appeal No 216 of 2006 (“RA No 216”). The Banks’ appeals were on the whole unsuccessful. On 31 July 2007, the Judge upheld the decision of AR Ang in striking out the appellants’ claims against the respondent, save for that part of the claim relating to damage to the cargo which he ruled could still be pursued in personam. This was notwithstanding his finding that the action in rem was wrongly instituted. The Judge also dismissed FESCO’s appeal for damages. FESCO was awarded 70% of the costs in RA No 214 and the Banks were awarded costs in respect of FESCO’s unsuccessful appeal in RA No 216 (see The Vasiliy Golovnin [2007] 4 SLR 277).

The appeals

6 CA 109/2007 is an appeal by Crédit Agricole against the High Court’s decision. The appeal concerns the decision to set aside the warrant of arrest and strike out the writ in rem. However, it bears mention that BCG, the other bank responsible for the arrest of the Vasiliy Golovnin, has not pursued the matter any further.

7 Civil Appeal No 110 of 2007 (“CA 110/2007”) is an appeal by FESCO against the High Court’s decision declining to award it damages arising from the wrongful arrest of the Vasiliy Golovnin. The Banks are the respondents in this appeal.

8 In this judgment, we shall address CA 109/2007 before dealing with CA 110/2007. We first briefly set out the undisputed facts and then condense the Judge’s grounds of decision (“the Judge’s GD”).

Background facts

9 The Judge has ably summarised the salient facts and we gratefully adopt substantial portions of the factual matrix set out in the Judge’s GD. The unfortunate saga began somewhat uneventfully around September 2005. On 9 September 2005, FESCO chartered the Chelyabinsk (“the chartered vessel”) on amended New York Produce Exchange (“NYPE”) terms (“the head charterparty”) to Sea Transport Contractors Ltd (“STC”). STC, in turn, sub-chartered the chartered vessel, also on amended NYPE terms, to Rustal SA (“Rustal”). The Banks provided financing to Rustal and received the relevant bills of lading as security.

10 In accordance with the terms of the head charterparty, STC instructed the chartered vessel to load a cargo of about 5,100mt of Chinese rice at Nanjing for discharge at “any African port”. Three bills of lading were issued. All of these bills referred exclusively to the head charterparty dated 9 September 2005 and stated the port of discharge as “any African port”.[note: 2] Of these three bills of lading, only one of them (“the African port bill of lading”) is in issue in these proceedings. The holder of the other two bills of lading declined to institute proceedings against FESCO in Singapore, despite the fact that the holder was also a party to the proceedings in Lomé, Togo.

11 Immediately after loading the Chinese rice, the chartered vessel then proceeded to Kakinada, India, where it loaded about 15,000mt of Indian rice. Five new bills of lading (KKD/LT/01, KKD/LT/02, KKD/LT/03, KKD/LT/04, KKD/LT/05) all dated 10 September 2005 were issued in respect of the Indian rice. The port of discharge was stipulated in each and every one of them to be Lomé, Togo. Of these five bills, three bills (KKD/LT/01, KKD/LT/02, KKD/LT/03) are held by Crédit Agricole, the appellant in CA 109/2007. The other two bills (KKD/LT/04, KKD/LT/05) are held by BCG. The cargo covered by bills numbered KKD/LT/03 and KKD/LT/05 was eventually discharged in Abidjan, a port in Côte d’Ivoire, after letters of indemnity were provided. No claims arise in relation to these bills for the purposes of this appeal. Also, as BCG is not a party to this appeal, there is no issue in relation to KKD/LT/04. Only two of the new bills of lading (KKD/LT/01, KKD/LT/02), hereinafter referred to as “the Lomé bills of lading”, and the African port bill of lading (see [10] above) are relevant for the purposes of the present appeal.

12 After a request by Rustal, STC instructed the chartered vessel to proceed to Abidjan. In Abidjan, part of the Indian rice (under KKD/LT/03 and KKD/LT/05, see [11] above) was discharged in exchange for letters of indemnity issued by STC. Presumably, the letters of indemnity were given because the bills of lading had named Lomé as the port of discharge. In early December 2005, Rustal also...