P.T. Wigo and Another v. The Owners of the Ship or Vessel "Rose Mary"(Ex "Eisho")(Panamanian Flag)

HCAJ000027/1985

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALITY JURISDICTION

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Admiralty action in rem against: the ship or vessel "ROSE MARY" (ex "EISHO") (Panamanian Flag)

BETWEEN

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Coram: Deputy Judge Barnett

Dale of hearing: 9 June 1985

Date of delivery of Judgment: 25 June 1985

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JUDGMENT

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1. The plaintiffs claim the return of freight in the sum of US$35,000 for non-delivery of cargo. In order to enforce their claim they have arrested the vessel in Hong Kong. By summons the defendants have applied for an order setting aside the writ and/or service of the writ, and/or a declaration that the plaintiffs were not entitled to arrest the vessel and/or the Court has no jurisdiction over the defendants.

2. It is common ground that Suk Shipping Company S.A. (Suk) who have given notice of intention to defend are the owners of the vessel. On 13th January 1984 Suk entered into a Memorandum of Agreement (MOA) for the sale of the vessel to Westransco Shipping Corporation and Ruben Salvador (I shall simply refer to them as Westransco) for US$160,000. Payment was to be made by 8 equal monthly instalments commencing in February 1984. Clause 14 of the MOA provided that if Westransco should fail to fulfil the agreement Suk had the right to cancel the agreement.

3. Thereupon the vessel was handed over to Westransco who bore it away with their own Master and crew.

4. Westransco, a Manila-based company, apparently made no payments under the agreement. Accordingly, by letter dated 18th September 1984, Suk advised Westransco that the MOA should be null and void. However, in spite of enquiries made of agents in Manila, Suk could not locate the vessel.

5. Precisely what was going on in Manila remains something of a mystery. What is clear, however, is that on 14th December 1984 a Mr. Duran, the proprietor of Consolidated Freight Services and purporting to be the owner of the vessel, signed the bill of lading "for the Master" for the carriage of the plaintiffs' goods to Indonesia.

6. On 18th December 1984 the 2nd plaintiff received a telegram purporting to be from Westransco in which Westransco claimed to be owner of the vessel and required the plaintiffs to remove their cargo from the vessel. The 2nd plaintiff made enquires and satisfied itself that Duran was the owner upon seeing a departure clearance addressed to him by the Bureau of Customs.

7. The vessel sailed on the 21st December but returned on the 26th December with alleged engine trouble. In spite of protests, the vessel sailed for Hong Kong in early January 1985. After abortive negotiations between the plaintiffs and Duran in Hong Kong, in the course of which it became clear that Duran was not the owner, the vessel was arrested on the 26th January.

8. For the defendants, Mr. Stone contended that the situation is analogous to that of a demise or bare boat charter where the owner parts with the whole possession and control of the ship and as a consequence:

(See Scrutton on Charterparties, 18th Ed., Arts 24 & 25)

9. Applying the analogy to the facts which can be discerned, there is not the necessary coincidence of rem and personam, said Mr. Stone, to make Suk liable. And Mr. Stone cited in extenso the House of Lords decision in The Baumwoll Manufactur von Carl Scheibler v. Christopher Furness (1893) A.C. 8 where Lord Herschell, L.C., said at p. 14:

"This case in my opinion turns on the construction of the charterparty, and the question is what was the relation created by it between the parties? Was it a "demise" of the ship, or if not strictly speaking a demise was it an agreement which put the vessel altogether out of the power and control of the then owner, and vested that power and control in the charterers, so that during the time that this hiring lasted she must be regarded as the vessel of the charterers, and not as the vessel of the owner?".

At p. 16, he went on:

"It cannot be disputed as a general proposition of law, that a person who does not himself enter into a contract, can only be made liable upon the contract if it was entered into by one who was his agent or servant acting within the scope of his authority; and it is equally indisputable that a liability by reason of a wrong or a tort can only be established by proving, either that the person charged himself committed the wrong, or that it was committed by his servants or his agents acting within the scope of their authority. In the present case the right of the plaintiffs to complain of the loss of their goods by reason of the facts alleged, may be regarded as arising as a matter of contract out of the bills of lading that were signed. Is it established that the persons who signed those bills of lading, with whom in the first instance the contract was made, the master, or Messrs. Ross and Keen the agents at the port, in making that contract were acting for the defendant Furness? It seems to me impossible to contend that these were contracts made either with the master or the agents on behalf of the defendant Furness.".

Later he said at p. 17:

"But there may be two persons at the same time in different senses not improperly spoken of as the owner of a ship. The person who has the absolute right to the ship, who is the registered owner, the owner (to borrow an expression from real property law) in fee simple, may be properly spoken of, no doubt, as the owner; but at the same time he may have so dealt with the vessel as to have given all the rights of ownership for a limited time to some other person, who, during that time, may equally properly be spoken of as the owner. When there is such a person, and that person appoints the master, officers, and crew of the ship, pays them, employs them and gives them the orders, and deals with the vessel in the adventure, during that time all those rights which are spoken of as resting upon the owner of the vessel, rest upon that person who is, for those purposes during that time, in point of law to be regarded as the owner. When that distinction is once grasped it appears to me that all the difficulties that have been raised in this case vanish. There is nothing in your Lordships' judgment, as I apprehend, which would detract in the least from the law as it has been laid down with regard to the power of a master to bind an owner, or with regard to the liabilities which rest upon an owner. The whole difficulty has arisen from failing to see that there may be a person; who, although not the absolute owner of the vessel, is, during a particular adventure, the owner for all those purposes.".

10. The crucial matters are the parting with possession and control, and the appointment of a master by the person to whom possession has been passed. These factors provide an exception to the usual rule of agency by which a shipper dealing with a master deals with the true owner.

11. Mr. Smith contended that the analogy is not a true one. Under the MOA the parting with possession was conditional upon payment of the monthly instalments whereas under a demise charter the parting would be absolute. Suk allowed Westransco to trade with the vessel subject to the right of cancellation. Until the MOA was performed and Westransco registered as the new owner, Suk remained owner. Further, the appointment of the master by Westransco was with Suk's implied permission and authority.

12. Accordingly, argued Mr. Smith, Suk remained liable on all bills of lading whether before or after Suk declared the MOA null and void.  Certainly, after that declaration Westransco ceased to have any rights and, because the master who remained on board had been appointed with Suk's implied authority, any shipper dealing with the master was thereby dealing with the owners, Suk. It matters not that the master did not personally sign the plaintiffs' bill of lading since bills are frequently signed"for the Master" and upon the master sailing with the goods the subject of such a bill, the bill is ratified.

13. I am afraid that I am unable to discern the difference contended for by Mr. Smith. I apprehend that the parting with possession by the owner under a demise or bare boat charter would be equally conditional upon payment of hire. Similarly, there would be implied permission and authority to appoint the master. I am satisfied Suk parted with the whole possession and control of the ship so that the situation, at least until September, was precisely that envisaged by Lord Herschell in his 2 owners concept.

14. After September, of course, the situation changed. Suk were endeavouring to reassert their rights as owners. But even by the time when the plaintiffs' bill of lading was signed they had been unable to exercise any rights over the vessel, assert control or in any way interfere with its trading activities. To adopt the words of Lord Herschell, it seems to me impossible to contend that the contract of carriage was made either with the master or an agent on behalf of Suk so as to make the bill a true owner's bill.

15. Mr. Smith suggested that the position might be different if there had been sufficient notification by Suk of the situation or if it had come to the notice of the shipper that the master had had his authority revoked. Lord Watson dealt with that matter, again in the Baumwoll case, in his judgment at p. 21:

"But I know of no principle or authority which requires that notice must be given when an owner parts, even temporarily, with the possession and control of his ship in order to prevent the servant of the charterer from pledging his credit.".

16. There is no doubt in my mind that the analogy with a demise charter is a good one. The necessary ingredients are present. I can see no basis for making Suk liable for the mysterious activities of Westransco, Duran or the anonymous master. In my view the writ should be set aside and the vessel released, and I so order.

Representation:

Mr. Clifford Smith (Johnson, Stokes & Master) for Plaintiffs.

Mr. William Stone (Holman, Fenwick & Willan) for Defendants.