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DMC/SandT/02/46
Note: the judgement in this case
has been upheld by the Singapore Court of Appeal. To access a note of the Court
of Appeal's decision, click here
Admiral Chartering Ltd v Owners of Ship "Rainbow Spring"
Singapore High Court: Belinda Ang JC:, 29 October 2002
Joseph Tan Jude Benny, for Admiral
Rajah & Tann, for Rainbow Spring Shipping Ltd., Owners of "Rainbow
Spring"
ARREST OF RAINBOW SPRING SHIPPING’S VESSEL FOR ACTION IN REM BASED ON
BREACH OF TIME CHARTERPARTY – WHETHER RAINBOW SPRING SHIPPING WAS CONTRACTING
OWNER UNDER TIME CHARTERPARTY SO THAT IN REM JURISDICTION AGAINST VESSEL WAS
ESTABLISHED – WHETHER WRIT OF SUMMONS AND WARRANT OF ARREST TO BE SET ASIDE
– WHETHER NON-DISCLOSURE OF MATERIAL FACTS
Summary
Admiral, as time charterers of "Rainbow Spring", brought an in rem
action against and arrested the vessel for damages for breach of the time
charterparty. Her registered owners, Rainbow Spring Shipping Ltd Inc ("RSSL")
entered appearance and applied to set aside the writ of summons and the warrant
of arrest on the ground that RSSL was not a party to the time charterparty.
Under section 4(4) of the Singapore High Court (Admiralty Jurisdiction) Act (cap
123) (the "Act"), the court only has jurisdiction to entertain an
action in rem for breach of charterparty if the person who would be liable in
personam on the claim is the owner of the vessel, both when the cause of action
arose and when the action was brought.
DMC Rating Category: Developed
This case note has been supplied by Ang
and Partners, the International Contributors for Singapore
Facts
Admiral time chartered "Rainbow Spring" in 1998 and sub-chartered
her in May 2000 on a voyage charter to carry a cargo of crystalline potassium
nitrate from Chile to Costa Rica and Guatemala. The cargo sustained wet damage
and the sub-charterer commenced arbitration in New York against Admiral for
damages. Admiral commenced an action in rem against "Rainbow Spring"
in September 2001 and arrested her in Singapore in December of that year.
Security was provided for her release by West of England P&I on behalf of
its member, RSSL, the vessel’s registered owners. RSSL entered appearance and
applied to set aside the writ of summons and the warrant of arrest on the ground
that it was not a party to the time charterparty, and therefore, the court had
no jurisdiction to entertain an action in rem against its vessel. Under the Act,
the plaintiff who brings an action in rem for breach of a charterparty must
establish that the person who would be liable in personam is the owner of the
vessel at the time the cause of action arose and also when the action is
brought.
RSSL also alleged that the warrant of arrest ought to be set
aside because Admiral had failed to disclose material facts in its affidavit
supporting the arrest. RSSL claimed, in addition, damages for wrongful arrest.
Judgment
1. The Court held that, to establish jurisdiction in rem, Admiral only had
to show that it had an arguable case that RSSL was the person who would be
liable in personam on the claim.
2. The time charterparty itself, and the conduct of the parties subsequent to
the conclusion of the charter, were inconsistent as regards the identity of the
"owner" of the "Rainbow Spring" with whom the charterers had
contracted.
3. The Court considered decisive the fact that the fixture was concluded by
exchange of correspondence before the formal charter was drawn up and signed, in
particular by the exchange of faxes between Admiral’s brokers and the vessel’s
agent in January 1998. Admiral’s brokers confirmed that the charter was
"clean fixed" with "Oriental Shipway Inc" identified as the
contracting owners. The Court observed that "clean fixed" in
chartering parlance is used to signify a binding charterparty contract or
concluded fixture.
4. It was therefore plain that Admiral’s case against RSSL was unarguable and
the writ of summons, as well as the warrant of arrest, were set aside.
5. With regard to the argument that there had been failure on the part of
Admiral to disclose material facts in its affidavit, the Court held that the
issue of a warrant of arrest in Singapore (unlike England) is a discretionary
remedy and therefore, full material disclosure of material facts is required.
How much detail is required in the affidavit depends upon the facts of a
particular case. The aim of Order 70 r 4(6) and r 4(7) (the rules stipulating
the contents of an affidavit in support of an arrest) is twofold: (i) to enable
the court to assess whether, on the facts of the particular case, it has in rem
jurisdiction under the Act; and (ii) to enable the defendant or prospective
defendant, or other persons interested in the vessel, to identify the basis upon
which and the claim in respect of which the property has been arrested.
6. Even where there has been material non-disclosure, the Court has a discretion
to uphold the warrant of arrest. Where the jurisdiction requirements of the Act
are satisfied and the writ has not been set aside, and there being no complaint
that rules 4(6) and (7) have not been complied with, the court in the exercise
of its discretion ought not to set aside the warrant of arrest purely on the
basis that the claimant had failed to disclose material matters in obtaining the
warrant of arrest.
7. In the present case, as Admiral had sued on the charterparty based on the
view that the signed charter (as opposed to the prior exchanges of
correspondence) constituted the binding contract, it was not unreasonable for
Admiral to have excluded the pre-fixture documents (from their affidavit in
support of the application for the arrest of the vessel) because of the parol
evidence rule (the rule that extrinsic evidence is not admissible to interpret
the terms of a contract which has been reduced in writing – there are
exceptions to this rule, for example, where there is ambiguity on the face of
the contract). The charterparty had been the working document for the parties
over the 4-year relationship and RSSL’s slipshod documentation had created
confusion. Furthermore, Admiral’s solicitors had advised that it had a good
claim against RSSL. For these reasons, the Court did not consider that a case
had been made out to justify setting aside the arrest on the ground of
non-disclosure of material facts.
8. For the reasons explained, it could not be said that the arrest of the vessel
was so obviously groundless as to amount to bad faith or gross negligence
implying malice. A weak case for a plaintiff is not gross negligence. The Court
therefore found that there was no wrongful arrest.
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