Societe Anonyme Des Petroles Mory v. The Owners of the Ship or Vessel "Union Darwin" (Panamanian Flag)

HCAJ000082/1983

Admiralty Law - Owner sued by supplier of necessaries to vessel under demise charter - Action in rem commenced under which ship arrested in Hong Kong - Initial question for determination of court was whether the vessel could be said to be "beneficially owned as respects all the shares therein" by the demise charter in accordance with the meaning of that phrase as used in S.3(4) of the Administration of Justice Act of 1956 so as to make it liable for arrest - court reviewed the authorities in this regard and followed Goff J. in the "I Congreso del Partido" holding that the phrase did not include a demise charterer within its meaning.

The court was also urged to hold that as the relevant sections of the Administration of Justice Act of 1956 had been repealed in England  they no longer had force in Hong Kong - Held that the provisions were brought into force in Hong Kong by the Admiralty Jurisdiction (Hong Kong) Order in council 1962 and that until that Order in council was revoked they remained in force in Hong Kong whatever may be the position in the United Kingdom.

Admiralty Action in rem against:
THE SHIP OR VESSEL "Union Darwin" (Panamanian Flag)

BETWEEN

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Coram: Hon. Power, J.

Date: 12 May 1983

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JUDGMENT

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1. In this matter the plaintiffs Societe Anonyme Des Petroles Mory sue the owners of the vessel "Union Darwin" for moneys owing in respect of fuel oil and diesel oil supplied to the vessel at Jeddah during the month of August 1982.

2. The vessel was arrested on the 8th April 1983 in Hong Kong harbour. On the 13th April, the defendants took out a Motion asking that the vessel be unconditionally released from arrest on the grounds that the Admiralty Court in Hong Kong does not have any jurisdiction in rem over the vessel under Section 3(4) of the Administration of Justice Act 1956 as applied in Hong Kong by statutory Instrument No.1547 of 1962.

3. Another ground was taken in the Notice of Motion which related to the insufficiency of the affidavit in support of the Warrant of Arrest. This ground was not argued in before me and it is unnecessary for me to deal therewith.

4. The uncontested facts are that Visco Line S.A., a Panamanian company, the owners of the vessel, by an agreement dated the 4th June 1980, demise chartered the vessel to the Union President Marine Corporation S.A. (H.K.). This lease agreement which was for a period of 54 calendar months, at a rent of US$42,370 for each month with the exception of the fifth month when the rent was in the sum of US$222,370, provided, in Article (7), that the vessel would, during the lease period, be in the full possession and at the disposal for all purposes of the lessee and under its complete control in every respect.

5. When the matter came on before me for hearing, counsel agreed that the only real issue was whether the matter was governed by Section 3(4) of the Administration of Justice Act 1956. This section provides that where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court may be invoked by an action in rem against that ship, if at the time when the action is brought it is "beneficially owned as respects all the shares therein" by that person. There was no issue that the demise charterer had ordered the fuel to be supplied at Jeddah. What fell to be determined by this Court was whether the ship was "beneficially owned as respects all the shares therein" by the demise charterer.

6. Counsel were agreed that there were, as far as their researches could ascertain, only four decided cases, upon this point. The first of these was the "St. Merriel" ⁽¹⁾. IV. Justice Hewson found as regards this point at 258:-

''I am further satisfied on the second point to be decided or this subsection that when the action was brought this ship was beneficially owned, as respects all the shares therein, by the owners, the Saint Line. If the Act had said "beneficially owned" and stopped there, Mr. Darling admitted that it might have been arguable that it might have embraced the charterers by demise. "Beneficially owned'' is not defined in this Act and there are circum-stances where a ship is owned by one person that is true ownership - where that person is the only person with a right to sell and yet where the same ship is beneficially possessed - if I may use that expression - or beneficially controlled, by some other person, such as in this case, where the ship is under charter by ''demise.  But the words of the Act are "as respects all the shares therein," and I conclude that the words are there for some purpose and that that purpose is to indicate the true owner, that is, the only person with a right to sell all the shares. So that under this section also I find that when the action was brought the Saint Line were the persons who beneficially owned the ship as respects all the shares therein. It follows from what I have said that this writ must be set aside."

7. It is suggested that this authority is not to be given any real weight as the question with which the Court was really concerned in that case was the meaning of the words "other charge" in section 3(3).  It is further suggested, quite correctly, that Hewson J. did not, possibly because it was thought at that time that it would not have been correct to do so, give any consideration as to whether he could seek assistance from the International Conventions of 1952.

8. The next case was the Andrea Ursula ⁽²⁾.  In this case Brandon J. dealt with this very points. He considered that the words "beneficially owned" were capable of referring to parties other than an equitable owner. In his view they were' capable of "a different and more practical meaning related not to title, legal or equitable, but to lawful possession and control with the use and benefit which are derived from them." Having decided that they were capable of another meaning, he considered that it was proper, relying upon the authority of Salomon v. Customs & Excise Commissioners ⁽³⁾, to look at the International Conventions of 1952. Having done so he found that the Convention relating to the Arrest of Sea-going ships did assist him in ascertaining the proper meaning to be given to the words "beneficially owned" and was satisfied that the meaning was wide enough to include not only a demise charterer but any other person with similar complete possession and control.

9. The next case in which the matter was considered was the I Congreso del Partido ⁽⁴⁾. Goff J. having considered the matter with Great care and having referred himself to the decision in the Andrea Ursula, said, at 538:-

"I start with the statute, and the words with which I am particularly concerned, and which I have to construe in the context of the statute, are "beneficially owned as respects all the shares therein". In my judgment, the natural and ordinary meaning of these words is that they refer only to such ownership as is vested in a person who, whether or not he is the legal owner of the vessel, is in any case the equitable owner, in other words, the first of the two meanings of which Brandon J. thought the words to be capable. Furthermore, on the natural and ordinary meaning of the words, I do not consider them apt to apply to the case of a demise charterer or indeed any other person who has only possession of the ship, however full and complete such possession may be, and however much control over the ship he may have."

10. The next case in which the matter was considered was The "Father Thames" ⁽⁵⁾ in which Sheen J. followed the ruling of Goff J. in The "I Congreso del Partido"_. ⁽⁴⁾

11. It fell to Mr. Stone, who appeared for the plaintiff, to argue that the decision in the Andrea Ursula ⁽²⁾ was correct and that this Court should follow it. While he suggested that the words dealing with this matter in The I Congreso del Partido ⁽⁴⁾ were obiter he was forced to concede that the matter had been considered with particular care by Goff J. and that when giving his decision he was fully aware that it was directly in conflict with the earlier decision of Brandon J.

12. Mr. Stone urged the Court to look at the real intention of Parliament when it enacted the Administration of Justice Act. He suggested that, when this was done, it could be seen that the clear intention of Parliament was that vessels should be liable to arrest where debts had been incurred by demise charterers in the course of arranging for the supply of necessaries to the vessel. Mr. Stone pointed out that Article 6 of the lease gave the lessee full custody in use of the vessel and that by Article 15, the lessee was given an option to purchase. He argued that the charter party was, in effect, an agreement for sale. He did, however, concede that while these matters gave force and point to his argument, they did not, in law, lift the charterer out of the category of demise charterer. He suggested what the Court was really concerned with was whether the quality of the charterer's control really amounted to ownership.

13. I do not intend to canvass the arguments further because it seems to me that the approach of Goff J. was clearly correct. The words used in the statute are awkward words both because they don't give effect to the convention and because they, at times, work against what many would consider a just solution to a claim made by a supplier of goods. Nonetheless what the Court is concerned is whether the words, when given their natural and ordinary meaning, express a clear and unequivocal intention.  In my view both the meaning and the intention conveyed thereby are perfectly clear and I cannot do better in this regard than repeat and adopt the words of Goff J. set out above. I am satisfied that the convention cannot be called in aid to interpret the words and that, when given their ordinary meaning, they cannot be applied to a demise charterer.

14. At the very end of his argument, Mr. Stone said that he wished to raise a further point. He pointed first to the Colonial Courts of Admiralty Act of 1890 which provides in section 2(2) that the jurisdiction of a Colonial Court of Admiralty should be the same as the Admiralty jurisdiction of the High Court in England, whether existing by virtue of any statute or otherwise, and that the Colonial Court could exercise that jurisdiction in like manner and to as full an extent as the High Court in England.

15. He then referred to the Administration of Justice Act 1956 which dealt with the Admiralty jurisdiction of the High Court and which was, for some purposes at least, brought into being in order to give e effect to International Conventions which had been signed at Brussels in 1952.

16. He then turned to Admiralty Jurisdiction (Hong Kong) Order in Council 1962 which provided.

"2.    The Colonial Courts of Admiralty Act 1890 shall, in relation to the Supreme Court of Hong Kong, have effect as if for the reference in section 2(2) thereof to the Admiralty jurisdiction of the High Court in England there were substituted a reference to the Admiralty jurisdiction of that court as defined by section 1 of the Administration of Justice Act 1956 subject to the adaptations and modifications of the said section 1 that are specified in schedule 1 to this Order.

3.    The provisions of sections 3, 4, 6, 7 and 8 of Part I of the Administration of Justice Act 1956 shall extend to Hong Kong with the adaptations and modifications that are specified in Column II of schedule 2 to this Order."

17. He then referred to the Supreme Court Act 1981 which in the United Kingdom replaced Sections 1 and sections 3 to 8 of the Administration of Justice Act 1956 with its own sections 20 to 24.  The effect of this was that in the United Kingdom in 1981 the old jurisdiction of the Admiralty court was replaced by a new one. No similar action has been taken as regards the Admiralty jurisdiction in Hong Kong.

18. Mr. Stone argued that, as the supreme Court Act of 1981 repealed sections 1 and Sections 3 to 8 of the Administration of Justice Act 1956, it destroyed the legislation which was the foundation of the Order in Council of 1962 and that this legislation was not only no longer in existence in the United Kingdom but was also no longer in existence in Hong Kong. He submitted, therefore, that the section with which we are concerned no longer existed and could not be in anyway binding as regards the matters in issue before this Court.

19. Mr. Stone did not support these arguments with any authority but simply argued that, upon the face of the legislation, his contention must be correct. That is not the view I take. Her Majesty was empowered by section 56 of the Administration of Justice Act 1956:-

56(2)"By Order in Council direct, either generally or in relation to particular courts or territories, that the Colonial Courts of Admiralty Act, 1890, shall have effect as if for the reference in subsection (2) of section two thereof to the Admiralty jurisdiction of the High Court in England there were substituted a reference to the Admiralty jurisdiction of that court as defined by section one of this Act, subject, however, to such adaptations and modifications of the said section one as maybe specified in the Order."

20. Her Majesty was, therefore, empowered by S.56(2) to direct, by Order in Council, that section 1 of the Administration of Justice Act 1956 would come into operation in Hong Kong with such adaptations and modifications as were thought fit. Her Majesty did so direct and that direction has never been withdrawn and I am satisfied that the adapted and modified section 1 remains the law in Hong Kong. The fact that it is no longer the law in the United Kingdom is of no moment. I am satisfied that until it is by Order in Council withdrawn from being the law in Hong Kong, it remains in force whatever may be the position in the United Kingdom.

21. Mr. Stone went on to argue that Order 3 of the Admiralty Jurisdiction (Hong Kong) Order in Council 1962 was not framed in the same way as Order 2 and that its effect was different from that of Order 2. Order 3 reads:-

"The provisions of sections 3, 4, 6, 7 and 8 of Part I of the Administration of Justice Act 1956 shall extend to Hong Kong with the adaptations and modifications that are specified in Column II of Schedule 2 to this Order."

22. Mr. Stone argued that while Order 2 might be said to have substituted Section 1 for the law previously applied by the Colonial Courts of Admiralty Act 1890, Order 3 did not do the same for sections 3, 4, 6, 7 and 8. He argued that these sections were simply extended to Hong Kong and that that extension could only have life while the statute of which they were a part was in force. Again I cannot accede to that argument. I am satisfied that by extending those provisions to Hong Kong with adaptations and modifications, Her Majesty in Council made those provisions the law in Hong Kong and until that law is repealed by a further Order in Council, they will remain the law in Hong Kong whatever may have been the fate of the parent legislation in the United Kingdom.

23. I do not, therefore, for the above reasons, accede to the arguments of Mr. Stone in this regard. I am satisfied that the motion to set aside must succeed and that I order that the vessel be unconditionally released from arrest. The plaintiffs are ordered to pay the defendants costs to be taxed.

24. I wish to add finally that it is time that the law in Hong Kong was amended to bring it into line with that in the United Kingdom.

(1)    (1963) probate 247.

(2)    (1973) 1 Q. B.265.

(3)    (1967) 2 Q. B. 166.

(4)    (1978) 1 Q. B. 500.

(5)    (1979) 2 L. L. R. 364.

Representation:

Mr. William Waung (Deacons) for applicant/defendants.

Mr. William Stone (Johnson Stokes & Master) for respondent/plaintiffs