Owners of Cargo Lately Laden on Board the Ship "Riau" v. The Owners of "Djatianom" and Others

HCAJ000318/1981

Admiralty Law - the application of s.3(4) of the Administration of Justice Act - the word "Charterer" when used therein is to be given its ordinary meaning - any ships in the ownership of the person who would be liable on a claim in an action is personam, can be made the subject of an action in rem.

IN THE SUPREME COURT OF HONG KONG

ADMIRALTY JURISDICTION

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Admiralty action in rem against: the ships "DJATIANOM", "DJATIBARANG", "DJATILUHUR", "DJATIMULIA"I "DJATINEGARA", "DJATIPRANA", "DJATIPURA", "DJATISARI", "DJATIWANGI", "HADJI AGUS SALIM", "JOHANNES LATUHARHARY", "M.H. THAMRIN", SAM RATULANGIE", "SETIABRDHI".

BETWEEN

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Coram: The Hon. Mr. Justice Power

Date: 13 October 1982

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JUDGMENT

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1. In this matter the plaintiffs who are the owners of the cargo lately laden on board the ship "Riau" sue the owners of a number of ships, one of which is the "Diatisari". Their claim is for damages for breach of contract and/or duty in and about the loading, handling, custody, care and discharge of the plaintiffs' cargo and the carriage thereof on board the ship "Riau" in the year 1981. It as ground that the ship "Riau" was not owned by the defendants at the material time but was owned by P.T. Mare Shakti Indonesia Bulk Transport and that the defendants were the time charterers of the vessel under a charter party dated the 7th November 1977. It is further common ground that the defendants were at all material times the owners of the ship "Djatisari" which has been arrested in this action. The parties appeared before me in response to a Notice of Motion filed by the defendants in which they asked for an Order that-

(a) under Order 12 rule 8 of the Rules of the Supreme Court, the writ of summons beginning this action and all subsequent proceedings in relation to the vessel "Djatisari" be set aside on the ground that the court has no jurisdiction to hear the same, on the further grounds that:-

(i) the defendants at all material times were not the owners of the ship "Riau";

(ii) the defendants at all material times were the time charterers of the ship "Riau";

(b) further or alternatively under the inherent jurisdiction of the Court, or further proceedings in this action be stayed on the ground that the plaintiffs and the defendants have, by the terms of the contract, the carriage between them evidenced by bills of lading No. NJ-HOl and HK-JKT-001 respectively agreed to refer and submit all disputes arising out of or in connection with the same, in respect of which matters this action is brought, for determination to the Court at Djakarta in Indonesia.

2. At the request of the parties at the outset the matter raised by paragraph (a) of the Notice of Motion was separately argued and I am now handing down ray suing thereon. It is accepted that the Administration of Justice Act 1956 applies in the Colony of Hong Kong. This act, in Section 1, provides that the admiralty jurisdiction of the High Court shall include the power to hear and determine any claims for the loss or damage to goods carried in a ship. It is common ground that the present action is such a claim. Section 3(4) of the Act goes on to provide:-

There does not seem to be any argument that Part I of the Administration of Justice Act gave legislative effect, to an extent which is not as clear as it might be, to the provisions of the International Convention Relating to the Arrest of Seagoing Ships, signed at Brussels, on the 10th May 1952. Parliament, clearly, was not content to enact the convention in terms. The inspiration, if this be the proper word, for Section 3(4) of the act was paragraph (4) of Article 3 of the Convention. This paragraph reads as follows:-

3. Mr. Ma, who appears for the applicant/defendants, raised two points which I will refer to as the interpretation point and the sister ship point. As to the first point he submitted that the word "charterer" in s.3(4) means "demise charterer". He sought to support this contention with two arguments. Firstly he said that, when interpreting the Act, it is permissible and proper to look at the Convention, which the Act was bringing into force, and that when the Convention is looked at it is plain that the word "charterer" in Section 3(4) means demise charterer. For the contention that it is permissible to look at the Convention he relies upon the judgment of Lord Diplock in the "Eschersheim" (1976) 2 Lloyd's L.R. 1, at 6, where he says-

"As the Act was passed to enable H.M. Government to give effect to the obligations in international law which it would assume on ratifying the convention to which it was a signatory, the rule of statutory construction laid down in Salomon v. Customs and Excise Commissioners, [1966] 2 Lloyd's Rep. 460; [1967] 2 Q.B. 116 and Post Office v. Estuary Radio Ltd., [1968] 2 Q.B. 740 is applicable. If there be any difference between the language of the statutory provision and that of the corresponding provision of the convention, the statutory language should be construed in the same sense as that of the convention if the words of the statute are reasonably capable of bearing that meaning."

There can, in my respectful view, be no doubt as to the correctness of this statement of law. However the qualification, contained in the words "if the words of the statute are reasonably capable of bearing that meaning", must be borne in mind when construing any words. It seems to me to be unarguable that if any word in the Act is an ordinary English word with a clear meaning which is not affected by the context then it cannot, no matter what may be contained in the Convention, he said to be capable of bearing any other meaning. Secondly he argued that, even if the Convention is not looked at, Section 3(4) must be interpreted in accordance with the maxim "noscitur a sociis" and that when this maxim is applied thereto, it is clear that the legislature when it used the word "charterer" meant demise charterer. His argument in this regard proceeds upon the basis that such a charterer is the only person who can be coupled with an owner or a person in possession or in control of a ship. As to the sister ship point Mr. Ma submitted that even if the Court is against him on the interpretation point, it would nonetheless hold that it had no jurisdiction because, as the arrested ship, the "Djatisari" and the ship in which the damaged goods were carried, the "Riau", were not sister ships, i.e. belonging to the same owner, the "Djatisari" was not liable to arrest in this action. When making this submission he relied upon the judgment of Sheen J. in the "Maritime Trader" (1981) 2 Lloyd's Law Report 156. Where he said, at p.156 -

"It is clear beyond doubt that the unanimous view of their Lordships who heard the Eschersheim appeal in the House of Lords is that the only vessels which may be arrested in respect of a maritime claim are the particular ship in respect of which the claim arose and any other ship in the same ownership."

In the "Eschersheim" (1976) 2 Lloyds L.R. l it is true that Lord Diplock at p.7, said-

"It is clear that to be liable to arrest a ship must not only be the property of the defendant to the action but must also be identifiable as the ship in connection with which the claim made in the action arose (or a sister ship of that ship)."

What, however, must be borne in mind whet considering that statement, and other statements regarding "sister ships" in the report of the Court of Appeal proceedings in the "Eschersheim", is that the "Eschersheim" was a sister ship of the vessel involved and it was, therefore, never an issue as to whether or not any ship other than a sister ship might be liable to arrest.

4. Mr. Mumford, who appeared for the plaintiffs, submitted that there was no substance in either of the points raised by Mr. Ma. As to the first he pointed out that the act uses the word "charterer" without any qualification and argued that as this is a common word it must have its ordinary meaning ascribed to it without any reference to the Convention. He argued that as the word is used without qualification and as its meaning is clear no maxim of interpretation can called into play. Mr. Mumford further submitted that it would not matter to his case even if the words of the Convention were called into play as they support his contention that charterers of all kinds are covered by the use of the word "charterer". In the outcome I did not find it necessary to rule upon this part of his argument.

5. I turn now to consider the cases cited by counsel in which the points before me have been raised and argued. Both points were raised in the "Permina 108" (1978) 1 Lloyd's Law Reports 311. In this case the Court was dealing with a vessel which had been arrested in connection with a claim brought against the owners thereof arising out of their operation of another vessel under a time charter party. The Court of Appeal in Singapore held that they were unable to accept the contention that the word "charterer" in s.4(4) of their Act, which is in the same terms as s.3(4) of the Administration of Justice Act, should be limited to mean charterer by demise only. The Court held, at 314,-

"We are unable to accept that contention because such a construction would cut down considerably the ordinary meaning of the word 'charterer'. In our opinion if the legislature had intended to limit the operation of the sub-section to, among others, the charterer by demise only and not other types of charterers it would have expressly added the words "by demise" after the word 'charterer'."

As to s.4(4) generally the Court, at 313, was of the opinion that its terms 'giving them their plaining and ordinary meaning are free of any ambiguity and are not reasonably capable of more than one meaning'. The Court also refused to accept the contention that only a "sister ship" could be arrested holding that the remarks of Lord Diplock in the "Eschersheim" were obiter dicta and that the Court had not been concerned with the construction of s.3(4)(b). The Court was satisfied that all charterers were covered by the section and that any ship owned by a charterer was liable to an action in rem being brought against it. When considering this case one must bear in mind the observation of the Court that not only was it unnecessary to look at the Convention but that, in the case of Singapore, it would be wrong to do so because Singapore, even when it was a Colony of the United Kingdom, was not one of the colonies to which the United Kingdom had, under Article 18, extended the Convention and because, since independence, Singapore itself had not acceded under Article 15 to the Convention.

6. The next case to which I was referred was the "Ledesco Uno" 1978 2 Lloyd's Law Reports 99, which also touches upon both of Mr. Ma's points. The learned judge in that case was satisfied, at 104, that the appeal court in Singapore had come to their conclusion on the interpretation point "purely and simply because they held that the word 'charterer' in Section 3(4) of the Administration of Justice Act or in the case of Singapore, Section 4(4), of the Act in Singapore was not ambiguous and refused to construe the word 'charterer' in the light of the terms of the 1952 Convention. Looking at it in that light their decision is correct and logical." The learned judge however went on to say that when he came to construe the word in the light of the law as it stood in Hong Kong he did not find that he could construe the word without hesitation and felt that he could properly turn to the Convention for assistance. He said, at 104,-

"In construing the word 'charterer', I find that the charterer was put in as a group of persons who would be in possession and in control, i.e., namely to a demised charterer only. This will be in accord with the English authorities in the sense that the other ship wholly owned by the demise charterer may be described as a sister ship or a ship in the like or the same ownership as a ship in connection of a claim of an action in personam."

At 105 the learned judge went on to say, after looking at Article 3 of the Convention, "It clearly shows that as far as Article 3 is concerned it supports the view that the word 'charterer' meant in Sub-section 4 of Section 3 of the Administration of Justice Act a demise charterer". The learned judge, who was concerned with a voyage charter-party, clearly took the view that it was proper to be assisted by the Convention when interpreting the word "charterer" and accepted that the English authorities had laid down that only sister ships were liable to arrest.

7. I turn now to consider the "Maritime Trader" 1981 2 Lloyd's Law Reports 153, which dealt with the sister ship point. In this case the Court was dealing with a demise charterer so it was not called upon to deal with the interpretation point. It had, however, to determine, inter alia, whether Section 3(4)(b) applied only to sister ships of the vessel in connection with which the claim arose. As stated in the headnote the Court held that "it was clear that the only vessels which might be arrested in respect of a maritime claim were the particular ship in respect of which the claim arose and any other ship in the same ownership and a ship beneficially owned by the demise charterers was not a sister ship of the ship they had chartered." The learned judge felt himself driven to take that view of the law because he considered that a strong view had been expressed in that regard by the Court of Appeal and the House of Lords in the "Eschersheim". He regretted that he was not free to approach the matter in the same way in which the Singapore court had approached it saying, at p.155, "Having regard to the powerful judicial views which have been expressed upon Section 3(4) of the Act, it is with diffidence that I say that if, in England, the matter was res integra, I would share the view expressed by Chief Justice Gin in the Singapore Court of Appeal. The sub-section in question has, however, been considered in great detail in the Court of Appeal and House of Lords in the "Eschersheim". It is to be noted here that the learned judge was referring to the part of Chief Justice Gin's judgment, at 313, where he held that the ship referred to in Section 3(4) (b) was "any other ship which, at the time when the action is brought, is the property of the person liable in personam, and who at the time when the cause of action arose was either the owner or charterer of, or in possession or in control of, the ship in connection with which the claim arose." In this part of his judgment Chief Justice Gin was clearly saying that it need not be a sister ship to the vessel in connection with which the claim arose, i.e. they need not be under the same ownership. The learned judge felt that, because in the "Eschersheim" Lord Diplock when referring to the construction of Section 3(4), indicated that clause (b) thereof was dealing with a "sister ship," the matter was, for all practical purposes, thereafter beyond argument. He stated, "It is clear beyond doubt that the unanimous view of their lordships who heard the "Bschersheim" appeal in the House of Lords is that the only vessels which may be arrested in respect of a maritime claim are the particular ship in relation to which the claim arose and any other ship in the same ownership."

8. After the decision in the "Maritime Trader" in 1981 the Courts were divided, as follows, as regards the interpretation of s.3(4):-

This matter next fell for consideration in the "Span Terza'' an unreported case which came before the Court of Appeal on Wednesday, 18th November 1971. In this case the ship in connection with which the claim arose was he "Neptunia" which had been chartered under a time charter party by the owners of the arrested ship, the "Span Terza". It was argued that the word charterer in Section 3(4) of the Act meant demise charterer, and that, as the owners of the "Span Terza" were not the demise charterers of the "Neptunia", the "Span Terza" was not liable to arrest. Sir David Cairns considered that the only way of escaping from the conclusion that the word "charterer” included all charterers was -

"By interpreting the word 'charterer' in Section 3(4) to mean 'demise charterer'. If it is to be supposed that parliament meant to be included as the 'person' mentioned in the sub-section, only a person who, like the owner or one of the types of persons mentioned after 'charterer', was at the time in question a person in possession or control of the ship, then that interpretation must give effect to that contention.

From my part, as a matter of construction I find it impossible to construe the words in that way. If only a demise charterer were meant one would, of course, have expected the word 'demise' to have been inserted before the word 'charterer'. Or alternatively, the word 'charterer' could have been omitted altogether because a demise charterer would be included in the words, 'a person in possession or control'."

9. He dealt with the dicta in the "Eschersheim" concerning sister ships in the following way -

"The problem which we are concerned did not in anywhere arise in the 'Eschersheim'. The issues to which their lordships were directing their attention were several, but none of them came anyway near to what we are considering today. What Lord Diplock said was clearly obiter, and it does not seem to me that he could possibly have had in mind the kind of problem with which we are dealing. I therefore consider that it is open to this court to hold, and we should hold, that in the very special circumstances of this case, the 'Span Terza' is liable to arrest although not a sister ship."

10. The learned judge dealt then both with the interpretation of the word "charterer" and with the question as to whether only sister ships were covered by Section 3(4)(b). He resolved both of these questions in the same way as had the Court of Appeal in Singapore holding that the word "charterer" did not have a limited meaning and that any ships in the ownership of the person who would be liable on a claim in an action in personam could be made the subject of an action in rem. As to whether or not the Convention assisted in the interpretation of the act in this regard, he said, "in the circumstances, I do not find that the provisions of the Convention are of assistance to me in deciding this case; I prefer to go on my interpretation of the words themselves". I find myself in complete agreement with the views expressed here.

11. Lord Justice Stephenson was in agreement with the views expressed by Sir David Cairns, however, Lord Donaldson delivered a dissenting judgment.

12. Lord Justice Stephenson said finally that, because the matter had been ex-parte and had been argued in haste, "the authority of the decision of the majority in this case will be of little, if any, more authority than the dissenting opinion of Lord Justice Donaldson". I bear this in mind but I am nonetheless fully persuaded as to the correctness of the reasoning of Sir David Cairns.

13. I hold that the word "charterer" when it is used in section 3(4) of the Act is not limited to demise charterer and that the words "any other ship" used in sub-section 3(4)(b) are not limited to sister ships but include any other ships which were in the beneficial ownership of the person liable in personam at the time when the action was brought. There will, by consent, be no order as to costs.

Representation:

Mr. Geoffrey T.L. Ma (Richards Butler) for applicants/defendants.

Mr. E.C. Mumford (Clyde & Co.) for respondents/plaintiffs.