Chit Foo Trading Co Ltd v. The Owners of the Ship "Everluck" (Honduras Flag)
Read the full judgment text of CACV 76/1979 on BabelCite. This Court of Appeal judgment was delivered on 23 April 1980 before Roberts CJ, Cons JA, Yang J.
Admiralty – arrest of ship – security for release – calculation of costs of arrest – quantum – appeal – costs of arrest – improper refusal of offer – offer of guarantee – material facts: plaintiff arrested vessel for disbursements and breach of contract – owners offered $300,000 guarantee on 17 July 1979 – plaintiff demanded $1.5 million – O'Connor J ordered security of $527,000 including $112,768 for 'costs at day' – plaintiff appealed that item – legal issue: proper calculation of costs of arrest and legal costs up to 17 July – whether $112,768 was justified – court found duplication of bailiff fees and lack of evidence – proper figure $55,000 (11 days at $2,000 per day plus $30,000 for legal costs) – total security reduced to $289,000 – offer of $300,000 was adequate – plaintiff should have accepted – costs of continued arrest for plaintiff's account – outcome: appeal allowed – order varied – respondents awarded costs of appeal
Legal issues: Calculation of security for release of arrested vessel
Outcome: Appeal allowed in part. The order of 24 September 1979 is varied: the vessel 'Everluck' is to be released upon a guarantee of $289,000 (amending paragraph B). The respondents' request for an express order that costs of arrest after 17 July be borne by the plaintiffs is refused as that matter is for trial.
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CACV000076/1979
Coram: Roberts, C.J., Cons, J.A. & Yang, J. Date of Judgment: 23 April 1980 ----------------- JUDGMENT ----------------- The judgment of the Court was given by Cons, J.A. 1. This appeal concerns the motor vessel "Everluck", a vessel registered in the Port of Honduras. On the 6th July last year, when she was in this Colony, she was arrested by the Plaintiffs. The writ in the action was endorsed with a claim for various disbursements amounting to approximately $220,000 which the Plaintiffs claimed to have expended on behalf of the owners under a contract of management with the owners and also for general damages for breach of that same contract. The warrant of arrest, however, was endorsed only with the claim for disbursements, although it was later amended to include breach of the contract in general. 2. The owners of the vessel are the Everluck Shipping Co. S. de R.L., which is a company incorporated in Honduras. The president is a lady who lives in Hong Kong. On the 13th July that company entered an appearance to the writ and by a solicitors' letter of the same date offered a bank guarantee in the sum of $300,000. 3. The Plaintiffs were not happy with the particular bank suggested, but by the 17th July the onwers' solicitors had found a bank to which the Plaintiffs had no objection. Even so the Plaintiffs refused that offer. They said that they wanted $1.5 million. There was then some inconclusive correspondence between the solicitors for each party and towards the end of July the Plaintiffs applied for an order of sale and the owners applied for an order of release. Both proceedings came before O'Connor, J. on the 24th September. It was at that hearing that the application was made to amend the warrant of arrest to include breach of the contract generally. That amendment was granted by O'Connor, J. and it was taken, for the purpose of those proceedings, that a re-arrest had actually been effected. 4. After hearing argument, O'Connor, J. refused the application for sale and ordered the release of the vessel, subject to the written consent of the caveators, upon a bank guarantee of $527,000 plus $2,000 for every day between that date and the actual furnishing of the guarantee. 5. He arrived at that sum of $527,000 in this way. He accepted $347,000 as a proper figure for disbursements and other items of liquidated damages under the contract. He added to that the sum of $180,000, which was for the bailiff's costs up to that date, i.e. the 24th September. Included in the amount for disbursements was a figure of $112,768 which is explained, in a letter of the 16th July from the Plaintiffs' solicitors, as "costs at day". It is against that particular item only that this appeal is brought. 6. It is said, and we think correctly, that if a proper figure had been awarded instead of that $112,768, the total of disbursements and damages would have been less than the $300,000 offered on the 17th July; in that case the judge below would have found that the Plaintiffs ought to have accepted that offer and that any costs of arrest incurred after the 17th July would eventually be laid at the Plaintiffs' door; the judge would therefore have not ordered any security in respect of those costs. 7. We find it a little difficult to see how that sum of $112,768 was arrived at. The judge does not deal with it in detail. He merely accepts the figure as it stands. Mr. Lee, who now appears for the Plaintiffs, although he did not do so below, is in no better position than ourselves. It would seem that if accurate calculations were ever made, which looks probable from the precise nature of the figure itself, those calculations have since been lost. Mr. Lee can only suggest generally that it represents bailiff's fees and anchorage charges up to the date of the letter, i.e. the 16th July together with estimated legal costs of the action. If the bailiff's fees and anchorage charges are included in the $112,000 then quite clearly there is some duplication. The judge allowed for those items in his $180,000. 8. It seems to us that the proper figure ought to have been $55,000. We arrive at it in this way. From the arrest on the 6th July to the offer of the 17th July is 11 days. We allow $2,000 a day for arrest charges and a little extra for, perhaps, the initial work undertaken by the bailiff. That gives $25,000. To that we generously add an allowance of $30,000 as security for costs. Perhaps we ought not to do that, for there has been no evidence whatsoever filed by the Plaintiffs to show what the costs of the action are likely to be. An affidavit to that effect should have been before the judge and, if not before him, at least certainly before us. 9. If we deduct $112,768 from the $347,000 found by the judge we arrive at $234,000 in round figures. If we then add the $55,000 which we think correct, the total is $289,000 i.e. less than the $300,000 offered. 10. The approach we have adopted so far is based on the notional position which the judge ought to have found to exist on the 17th July. The same conclusion can be reached by an alternative, perhaps more simple, approach and that is to take the position as it was in actual fact on the 17th July. At that date the warrant of arrest was endorsed solely with a claim for disbursements in the sum of $220,000. The owners offered a bank guarantee in the sum of $300,000. The excess was more then adequate to cover the costs of arrest to that date and possible legal costs. Quite clearly the Plaintiffs should have accepted that guarantee. The costs of continued arrest upon their refusal ought to be for their account. No security for them was necessary. 11. For these reasons we think the order made by the judge on the 24th September ought to be amended, by deleting the present paragraph (B) and replacing it with the words
12. Counsel for the owners asks us to make an express order that the costs of arrest between the 17th July and the 24th September should be borne by the Plaintiffs. It seems that the vessel has since been sold and that the bailiff has taken all his costs, including those for that period, as a first charge upon the monies realised. Counsel feels that his clients may have some difficulty in recovering those particular costs without an express order. 13. We have some sympathy with the owners in the position in which they now find themselves, but we do not think we can accede to their counsel's request. Payment of the costs of arrest is a substantive matter to be dealt with at the trial. It does not fall within interlocutory proceedings dealing only with what is the proper amount of security. 14. We do make an order that the Respondents are to have their costs of their appeal. Representation: Michael K.S. Lee (K.Y. Woo & Co.) for Appellant/Plaintiff Mumford (V.L. Cheung & Co.) for Respondent/Defendant |