www.ipsofactoJ.com/archive/index.htm [1984] Part 5 Case 10 [HC,S'pore]    

 

HIGH COURT OF SINGAPORE

 

The “Daien Maru No 18”;

Kenny Franco

- vs -

Owners of Vessel

Coram

LP THEAN J

19 DECEMBER 1984

Judgment

LP Thean J

  1. This is an application by the defendants by way of notice of motion to discharge a warrant of arrest executed on the vessel, ‘Daien Maru No 18’ (the vessel) on 25 July 1984 at the instance of the plaintiffs, who initiated this action in rem.

  2. The circumstances leading to the arrest of the vessel were rather unusual and arose in this way. 

  3. In the application before me Mr. Pereira for the defendants contended that the plaintiffs having obtained final judgment against the defendants for the full amount claimed had lost the right of arrest, as the plaintiffs’ cause of action had merged in the judgment, and in support relied on the decision of Mocatta J in The Alletta [1974] 1 Lloyd’s Rep R 40. That decision is the mainstay of his argument.

  4. In The Alletta the vessel, ‘Alletta’, belonging to the first defendant collided with the plaintiffs vessel, ‘England’, in the Thames on 20 December 1963. On 21 April 1964 the plaintiff took out a writ in rem against the first defendant, who were then the owners of the ‘Alletta’ and the writ was served on their solicitors who undertook to accept service and entered an appearance. The action was tried before Hewson J who gave judgment on 21 October 1965, holding the plaintiff one-fifth to blame and the first defendants four-fifths to blame. An appeal against that judgment by the plaintiff was dismissed by the Court of Appeal. On 20 June 1973 (about ten years after the collision and nine years after the issue of the writ in rem) the ‘Alletta’ was sold by the first defendants to the second defendants, who at that time had no knowledge of any actual or potential claim by the plaintiff against the owners of the ‘Alletta’. On 9 July 1973 on an ex parte application Mocatta J made an order that a warrant of arrest be issued against the ‘Alletta’, who by then had changed her name to ‘Tarmac I’. The warrant, however, was not executed on the ‘Alletta’ upon certain undertakings or security procured by underwriters of the first defendants, who were under an obligation to indemnity the second defendants. The second defendants as the then owners applied for, inter alia, an order that the warrant of arrest be discharged and/or a declaration that plaintiffs were not at the date of the issue of the warrant entitled to arrest the vessel.

  5. Mocatta J on the basis of the decision of Bateson J in The Point Breeze [1928] P 135 held that the ‘Alletta’ could not be arrested after judgment had been pronounced. He said at p 48:

    Although The Point Breeze differs from the present case in that the giving of bail was there involved, Mr. Bateson J clearly thought that a warrant of arrest could not be properly served on a vessel after liability had been determined. The very slightly critical comment on what was said by Mr. Bateson J by Mr. Roche J as they then was, in Westminster Bank v West of England England Association (1933) 46 Ll L Rep pp 104–105 in no way touches on this point. That the time for arrest is before and not after a pronouncement on liability appears from two recent cases. Thus in The Zafiro [1959] 1 Lloyd’s Rep 359 at p 367; [1960] P 1 at p 15, Mr. Hewson J, after holding that the arrest of a vessel pursuant to a writ in rem issued by necessaries men was not an ‘execution’ within the meaning of s 325 of the Companies Act 1948, said:

    … Execution, in my view, succeeds and does not precede judgment, whereas in arrest there is no existing judgment upon which to execute.

    See also, per Mr. Brandon J in The Monica S 1968 P at p 773; [1967] 2 Lloyd’s Rep at p 132.

  6. Apart from The Point Breeze (supra), none of the cases referred to by Mocatta J in his judgment have any real bearing on the point in issue before him. In arriving at the conclusion that the ‘Alletta’ could not be arrested after judgment, Mocatta J said he was following and adopting the reasoning of Bateson J in The Point Breeze (supra). He said, at p 50:

    I have now commented on nearly all the authorities cited to me; the few I have omitted do not seem to me to assist either party. So far as the cases go the balance of authority in my judgment strongly favours the second defendants and I am content to follow and apply the reasoning in The Point Breeze with which I respectfully agree, based as that decision was on the principles laid down by Dr Lushington in The Kalamazoo, The Wild Ranger and The Hero.

  7. In The Point Breeze there was a collision between ‘Flamand’, a French ship, and the ‘Point Breeze’, an American ship. The owners of the former issued a writ in rem against the ‘Point Breeze’ and the defendants’ solicitors accepted service and gave an undertaking to put in bail. In due course a bail bond in the sum demanded by the plaintiff was given. The case was tried and Bateson J held the ‘Point Breeze’ solely to blame and judgment for damages to be assessed was given for the plaintiff. Seven days later the plaintiff asked for additional bail as the amount of initial bail given was insufficient to cover the damages caused by the collision. No further bail was given and the plaintiff obtained a warrant of arrest which was executed on the ‘Point Breeze’. Subsequently, the solicitors for the defendant undertook to Provide additional bail under protest and the vessel was then released. Upon a motion by the defendant to set aside the arrest, Bateson J held that the initial bail which had been put up for the vessel in effect released the vessel altogether and thereafter she could not be arrested in the same action. In arriving at this decision, Bateson J followed the opinions of Dr Lushington in The Kalamazoo (1851) 15 Jur 135 and The Wild Ranger (1863) Br & Lush 84; 167 ER 310 and said:

    The case seems to be covered by the clear expression of opinion of Dr Lushington in The Kalamazoo 15 Jur 885, 886: ‘It is perfectly competent to take bail to the full value, but the effect of taking bail is to release the ship in that action altogether. It would be perfectly absurd to contend that you could arrest a ship, take bail to any amount, and afterwards arrest her again for the same cause of action. The bail represents the ship and when a ship is once released upon bail she is altogether released from that action.’

    And he further said:

    In The Wild Ranger (1863) Br & Lush 84, 87, Dr Lushington repeats his opinion: ‘Now bail given for a ship in any action is a substitute for the ship; and whenever bail is given the ship is wholly released from the cause of action, and cannot be arrested again for that cause of action’.

    In conclusion he held:

    I do not think, in face of the distinct expression in The Kalamazoo 15 Jur 885 and The Wild Ranger (1863) Br & Lush 84 that a vessel cannot be arrested after she has been once released on bail in the same action for the same cause of action, that ruling should be departed from.

  8. It seems to me abundantly clear that Bateson J on the basis of the decisions of Dr Lushington in The Kalamazoo and The Wild Ranger held that the ‘Point Breeze’ could not be arrested on the ground that the initial bail had been put up and that bail released the vessel altogether from the cause of action in that action. The true ratio decidendi of his decision is not that the ‘Point Breeze’ could not be arrested because judgment had been obtained and the right of offset was thereby lost, though the fact that the judgment had been obtained was mentioned in his decision. Any doubt on this point is obviated by the following passage of his judgment at p 142:

    If the plaintiffs are right in their contention that they are entitled to arrest this ship, it seems to me that it will open the door to the re-arrest of vessels, or arrest after getting bail, whenever a party thinks that his claim may be more than he originally, thought it was. No immunity from arrest will be obtained by giving bail and the result of that, on the question of maritime liens might be very serious.

  9. In my opinion The Point Breeze (supra) does not warrant the conclusion arrived at in The Alletta (supra) and Mr. Selvadurai on behalf of the plaintiffs argued that The Alletta (supra) was wrongly decided on principle and urged me not to follow that decision.

  10. It is necessary to consider on principle whether in an action in rem against a vessel the right to arrest that vessel is lost after judgment in that action has been obtained on the ground that the cause of action has merged in the judgment. In the consideration of this point it is helpful to start with the following basic propositions, which, on authorities, are incontrovertible. First, an admiralty suit in rem is an action against the res. In The Henrich Bjorn (1886) LR 11 PC 270 Lord Watson said, at pp 276–277:

    The action is in rem, that being, as I understand the term, a proceeding directed against a ship or other chattel in which the plaintiff seeks either to have the res adjudged to him in property or possession, or to have it sold, under the authority of the court, and the proceeds, or part thereof, adjudged to him in satisfaction of his pecuniary claims. The remedy is obviously an appropriate one in the case of a plaintiff who has a right of property or other real interest in the ship, or a claim of debt secured by a lien which the law recognises.

  11. In The Burns [1907] P 137, in response to arguments by counsel that actions in rem and actions in personam are in the end merely different ways of proceeding against a defendant and that an action in rem in no way differs in its nature from an action in personam save that in the former there is attached a process of arrest which compels appearance of the defendant, Fletcher Moulton LJ said, at p 147:

    I am, therefore, of opinion that the fundamental proposition of the argument of the appellants’ counsel fails, and that the action in rem is an action against the ship itself. It is an action in which the owners may take part, if they think proper, in defence of their property, but whether or not they will do so is a matter for them to decide, and if they do not decide to make themselves parties to the suit in order to defend their property, no personal liability can be established against them in that action. It is perfectly true that the action indirectly affects them. So it would if it were an action against a person whom they had indemnified.

  12. Secondly, following from the first proposition (and as was said by Fletcher Moulton LJ above), if no appearance is entered by the defendant to such an action, judgment when entered is enforceable only against the res, quoad res and no more, and the defendant in such an action will not suffer any personal liability. Thirdly, once the defendant to an action in rem has entered an unconditional appearance he submits to the jurisdiction of the court personally and from then onwards the action continues as an action in rem and in personam: see The Gemma [1899] P 285 and The 8 August [1893] AC 8.

  13. In consequence, if the judgment is not fully satisfied by enforcement thereof against the res, execution proceedings can be initiated against the defendant: see The Dictator [1892] P 304. It must follow that in such a case the judgment when obtained is a judgment in rem against the res as well as in personam against the defendant personally, and it must further follow that the judgment can be enforced against the res by, a remedy in rem — the procedure of arrest. If it is correct that in an action in rem against a res, in which no bail has been put up for the res, the plaintiff after judgment cannot arrest the res, then it must follow logically that the judgment is not one operating in rem against the res and no recourse can be had against the res, except by way of a writ of seizure and sale which is an execution proceeding for enforcing a monetary judgment in personam. Such a conclusion is extremely strange and, in my view, untenable.

  14. It has been decided by Brandon J (as he then was) in the case of The Monica S [1968] P 741 that once an action in rem against a ship has been commenced under s 3(4) of the Administration of Justice Act 1956 of England (which is in pari materia with s 4(4) of our High Court (Admiralty Jurisdiction) Act (Cap 6) it can be proceeded with against that ship despite any subsequent change in the ownership of the ship, even if the change has taken place before the writ is served. That decision was approved by the Court of Appeal in England in Re Aro Co Ltd [1980] 1 Ch 196 where it was held that a plaintiff by commencing an action in rem against a ship, even if the writ has not been served or the ship has not been arrested, puts himself in a position of a secured creditor. Brightman LJ (delivering the judgment of the court) said at pp 207–208:

    The usual object of suing in rem is to obtain security. The plaintiff becomes entitled upon the institution of his suit to the arrest and detention of the subject matter in the custody of an officer of the court pending adjudication, and on adjudication in his favour to a sale and satisfaction of his judgment out of the net proceeds thereof, subject to other claims ranking in priority to or pari passu with his own. So stated, the rights of a plaintiff suing in rem have points of similarity with the rights of a legal or equitable mortgagee or chargee, such persons are also entitled in appropriate circumstances to have the subject matter of the charge preserved for their benefit, and if the account is in their favour to have it sold in order to satisfy the debt. The similarity is carried a stage further by the decision in The Monica S [1968] P 741, where it was held that the burden of the statutory right of action in rem in a case under s 3(4) of the Administration of Justice Act 1956 ran with the ship so as to enable the plaintiff to serve the writ on the ship notwithstanding a transfer of ownership since the writ was issued. It must follow from that decision that the plaintiff in rem is entitled to have the ship arrested despite change in ownership and notwithstanding that the writ has not been served. The case is of critical importance to our decision because, applied to the instant case, it means that, had the liquidator sold the ship, he could only have sold subject to the plaintiffs’ claim; this does not seem far removed from saying that the liquidator could only sell a proprietary interest, equivalent to a right to redeem.

  15. If a plaintiff by instituting an action in rem against a ship (assuming that such action was properly constituted under the High Court (Admiralty Jurisdiction) Act) can ‘properly assert as against all the world’ that the ship is a security for his claim and arrest the same, then it seems to me that after such plaintiff has obtained judgment for his claim in that action he can, on principle, also properly so assert that the ship is a security for the judgment obtained and therefore is entitled to arrest the ship (assuming that no bail has been previously put up for the ship). That once a judgment has been obtained in an action the claim therein is merged in the judgment is correct and is beyond dispute. It does not follow, however, and I can find no authority to the effect, that the right to security in the ship is lost or extinguished by such merger. On principle, I do not see why such right to security, which is enforced by arrest of the ship, should be lost merely because the claim or cause of action has merged in such judgment. Arrest of a ship in an action in rem is a mere procedure and its object is to obtain security that the judgment should be satisfied: see the judgment of Sir Boyd Merrirnan P in The Beldis [1936] P 51, 67, 73-74. See also The Cap Bond [1967] 1 Lloyd’s Rep 543, 547, where Brandon J (as he then was) held that the object of an action in rem was to provide security for a plaintiff in respect of a judgment of court in the same action or sum due under a settlement in that action and such security was not available for payment of an award of an arbitration tribunal. Having regard to these authorities it seems to me extremely odd that the right to security in a ship which arises from an action in rem against the ship and the arrest thereof which is a remedy to provide for such security should be lost or extinguished once final judgment is pronounced or obtained in that action.

  16. There is another reason that impels me to arrive at the conclusion that in the instant case the right of arrest of the vessel has not been lost by reason of the judgment having been entered in favour of the plaintiffs. The plaintiffs have a maritime lien on the vessel which arose out of the services provided for the vessel. (So had the plaintiffs a maritime lien on the ship in The Alletta which arose out of damage caused by that ship). A maritime lien on a ship is a claim or a privilege upon the ship and when it arises it attaches to or travels with the ship into whosesoever possession it comes so that an innocent purchaser of the ship may find this property, the ship, subject to a claim which existed prior to the date of purchase. In The Bold Buccieugh (1851) 7 Moo PC 167, 284–285, Sir John Jervis CJ in delivering the judgment of the Privy Council described a maritime lien as a privilege or claim on a thing to be carried into effect by legal process and said:

    This claim or privilege travels with the thing into whosesoever possession it may come. It is inchoate from the moment the claim or privilege attaches, and when carried into effect by legal process, by a proceeding in rem, relates back to the period when it first attached.

  17. Such a lien is discharged by satisfaction or from laches or in any other way by which, by law, it may be discharged: see the judgment of Mellish LJ in The Two Ellens (1872) LR 4 PC 161, 169. A maritime lien on a ship is enforced by invoking the admiralty jurisdiction of the High Court: s 4(3) of the High Court (Admiralty Jurisdiction) Act, and an action in rem when instituted perfects the lien. Scott LJ in The Tolten [1946] P 135.

    The lien consists in the substantive right of putting into operation the admiralty court’s executive function of arresting and selling the ship, so as to give a clear title to the purchaser, and thereby enforcing distribution of the proceeds amongst the lien creditors in accordance with their several priorities, and subject thereto ratebly. I call that function of the court ‘executive’ because, once the lien is admitted, or is established by evidence of the right to compensation for damage suffered through the defendant ship’s negligence, there is then no further judicial function for the court to perform, save that in the registry where priorities, quantum and distribution are dealt with.

  18. On these authorities it is clear that a maritime lien gives a right to the ship enforceable by an action in rem. This being the case, it seems to me logical and right that a plaintiff who has instituted an action in rem against a ship to enforce a maritime lien thereon, must be entitled to arrest the ship in the same action even after he has obtained judgment, provided always that in such a case no bail has been previously put up for the ship in that action. If such right of arrest is said to have been lost by virtue of the judgment having been obtained, then it must follow that the lien is extinguished or discharged by such judgment in the same action instituted to enforce it. Such a conclusion in my view is a non sequitur.

  19. For all these reasons which I have given I decline, with respect, to follow the decision of Mocatta, J in The Alletta (supra). In the result, this application is dismissed with costs.

Cases

Alletta, The [1974] 1 Lloyd ’s Rep 40; Aro Co Ltd, Re [1980] 1 Ch 196; August 8, The [1983] AC 450; Beldis, The (1936) P 51; Bold Buccleugh, The [1851] 7 Moo PC 167; Burns, The (1907) P 137; Cap Bon, The [1967] 1 Lloyd’s Rep 543; Dictator, The (1892) P 64; Gemma, The (1899) P 285; Henrich Bjorn, The (1886) 11 App Cas 270; Kalamazoo, The [1851] 15 Jur 885; Monica S, The (1968) P 741; Point Breeze, The (1928) P 135; Tolten, The (1946) P 135; Two Ellen, The (1872) 4 LR PC 161; Wild Ranger, The [1863] Br & Lush 84; 167 ER 310

Representation

L Pereira (L Pereira & Netto) for the defendants/applicants.

VKS Narayanan (VKS Naruyanan)for seven members of the crew in Admiralty Suit No 219 of 1984.

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