The "Inai Selasih"
Niru & Company for the defendant
ADMIRALTY: ARREST: WHETHER CLAIM FELL WITHIN HIGH COURT ADMIRALTY JURISDICTION: WHETHER DEFENDANT WAS CHARTERER OF, IN POSESSION OR IN CONTROL OF SHIP: WHETHER ARREST WAS WRONGFUL
In this case, the court held that it had jurisdiction under the Singapore High Court (Admiralty Jurisdiction) Act to consider an in rem claim brought by the plaintiff company arising from a Memorandum of Understanding ("MOU"), under which the defendant was to seek dredging and reclamation works in Malaysia. The MOU also provided for the supply by the plaintiff company of a dredger "Inai Seroja", which was then chartered by demise from plaintiff to defendant. When the plaintiff later arrested the defendant’s vessel, "Inai Selasih", for claims arising under the MOU, the defendant claimed that the arrest was wrongful as (1) the claims under the MOU did not relate to the use or hire of a ship; and/or (2) the defendant was not the charterer of the "Inai Seroja" at the time the cause of action arose. The defendant failed on the first ground but succeeded on the second ground in setting aside the Writ of Summons and the Warrant of Arrest.
DMC Rating Category: Developed
This Case Note was contributed by Ang & Partners, the Website’s International Contributors for Singapore
The plaintiff company entered into a joint venture with the defendant, evidenced by a Memorandum of Understanding ("MOU"). Under the MOU, the defendant was to secure contracts for dredging and land reclamation works in Malaysia. The plaintiff was to provide the dredgers, equipment and technical assistance. Under the MOU, the plaintiff company supplied the "Inai Seroja", which it chartered on demise to the defendant.
The plaintiff subsequently had various claims against the defendant under the MOU. The plaintiff arrested the "Inai Selasih", a ship owned by the defendant.
The defendant unsuccessfully applied to the Registrar to set aside the Writ of Summons and Warrant of Arrest. The defendant appealed. The grounds of the defendant’s appeal were that
(a) The MOU did not fall within the scope of section 3(1)(h) of the High Court (Admiralty Jurisdiction) Act (the "Act") as it did not relate to the use or hire of the "Inai Seroja"; and
(b) The defendant was not the charterer of, or in control or in possession of, the "Inai Seroja" because the charterparty relied on by the plaintiff was a sham. Therefore, the requirements of section 4(4) of the Act, which provides that the party liable in personam must fit that description at the time the cause of action arose, were not satisfied.
As to (a), Section 3(1)(h) of the Act provides that the High Court has admiralty jurisdiction to hear "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship". The defendant argued that the plaintiff’s claim in this instance did not fall within the meaning of section 3(1)(h) on the grounds that the MOU was not an agreement for the hire or use of the "Inai Seroja", but one that related to dredging and land reclamation works in Malaysia. The defendant further argued that the deployment of two dredgers by the plaintiff was incidental to its participation in the MOU. The MOU was not confined to the hire or use of these dredgers.
(2) The plaintiff’s claim failed, however, as it did not satisfy the requirements under section 4(4) of the Act. The plaintiff was unable to prove on the balance of probabilities that the defendant was the charterer of the "Inai Seroja" at the time the cause of action arose. The evidence showed that the charterparty was created merely for appearance’s sake and was really a sham giving rise to no legal rights and obligations.
(3) The Judge also found that the arrest was wrongful. The plaintiff had acted mala fides (in bad faith) in arresting the "Inai Selasih" on the basis of a bareboat charter which it knew was a sham. The court had been misled by the plaintiff’s non-disclosure of material facts into issuing a Warrant of Arrest. The plaintiff was ordered to pay damages for wrongful arrest. Both the Writ of Summons and Warrant of Arrest were set aside.
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