"Zhu Sheng 2" v. The Owners and/or Demise Charterers of the Vessel "Zhu Sheng 2"

HCAJ 68/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION ACTION NO. 68 OF 2007

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Admiralty Action in rem against the vessel “ZHU SHENG 2”

BETWEEN

THE OWNERS OF AND/OR OTHER PERSONS
ENTITLED TO SUE IN RESPECT OF CARGO
LATELY LADEN ON BOARD THE VESSEL

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Before:  Hon Reyes J in Chambers

Date of Hearing:  24 April 2009

Date of Judgment:  24 April 2009

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J U D G M E N T

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I.       INTRODUCTION

1.The Plaintiffs arrested a barge which belonged to the Defendants. The Defendants seek to set aside the Plaintiffs’ Writ.  If they succeed in so doing, the arrest (which is premised on the validity of the Writ) may also have to be set aside.

II.      BACKGROUND

2.The Plaintiffs allege that their cargo was damaged while being carried on board the barge “ZHU SHENG 2” between Jiuzhou (in the Mainland) and Hong Kong in July 2006.  The Plaintiffs issued a Writ on 13 April 2007.  The Writ was amended on 11 June 2007.

3.The Plaintiffs did not serve the Writ on the barge during the initial 12 month period of the Writ’s validity.  Instead, by an Affirmation of Li Ching Man Rosa dated 10 April 2008, the Plaintiffs applied ex parte to Waung J to extend the validity of the Writ for a further period of 12 months.

4.The relevant part of the Affirmation in support of the extension application was brief.  It stated:-

“4.     It has not been possible for the amended Writ to be served upon the ‘ZHU SHENG 2’.  I have made inquiries with the Marine Department who have confirmed that the ‘ZHU SHENG 2’ have not called in Hong Kong since 13 April 2007.  A copy of letter from Marine Department confirming the position is produced and shown to me marked ‘LCMR-1’.  It is not possible for the Plaintiffs to simply issue a new writ as the one year limitation period under the Hague Rules expired during April 2007.

5.      In the premises, I respectfully ask that the validity of the amended Writ herein for service be extended for a further period of twelve months from 13 April 2008.”

5.Consequent on the application, on 14 April 2008 Waung J ordered that the validity of the Writ be renewed for 12 months from 13 April 2008.  The Writ was thus extended to 12 April 2009.

6.The barge was arrested in Hong Kong on 26 March 2009.  The arrest was led by the 2nd Affirmation of Li Ching Man Rosa.  The extended Writ was served on the barge on the same day.

7.The present application to set aside is being driven by Zhu Sheng Maritime (HK) Ltd. (a Hong Kong company) on behalf of the Defendants.  Zhu Sheng owned the barge at the time of the alleged damage to the Plaintiffs’ goods.  Zhu Sheng sold the barge to Leadtop Holdings (HK) Ltd. on 23 September 2008 and Leadtop on-sold the barge to Hong Kong Rebirth Medicine on 7 January 2009.  For convenience, in the remainder of this Judgment I shall continue to refer to Zhu Sheng as the Defendants.

8.The Defendants point out that the barge is a Hong Kong registered vessel (Licence No. B21278V).  Between 15 July 2006 and 30 April 2008 (that is, during the entire initial 12 month currency of the Writ) the barge was in Hong Kong waters.  The barge returned to Hong Kong after a job in the Mainland on 15 July 2006.  It has never since left Hong Kong again.  Between 13 April 2007 and 13 April 2008 the barge was regularly berthed at Yau Ma Tei.

III.     DISCUSSION

9.The Defendants argue that, had Waung J been aware of the facts just summarised, he would not have extended the validity of the Writ. 

10.It was incumbent upon the Plaintiffs (the Defendants argue) to serve the Writ as soon as possible.  The barge being in Hong Kong all along, there was nothing preventing the barge from having been served during the initial validity of the Writ.  The summarised facts (had they been disclosed) would have been material to Waung J’s decision to extend the Writ.  Since such material facts were not disclosed, Waung J’s ex parte order (the Defendants conclude) ought to be set aside.

11.In my view, the Defendants are right.  I do not see that the Plaintiffs have any answer to the Defendants’ argument.

12.It was the Plaintiffs’ duty (through their solicitors) “to take all reasonable steps to ensure that [a Writ] is served during its initial currency” (Waung J in The “ORIENTAL LILY” [2005] 2 HKC 343 (at 345B), citing Brandon J in The “BERNY” [1979] 1 QB 80).

13.In a 3rd Affirmation of Li Ching Man Rosa in opposition to the Defendants’ application, the Plaintiffs depose as follows:-

“7.     The Plaintiffs have good reason to believe that since the incident leading to the damage of the Cargo happened in Zhuhai, China, the Vessel was trading between China and Hong Kong.  Therefore, after the Writ was issued, the Plaintiffs placed the Vessel on the daily watch list [of the Marine Department]. Ship watch exercise was conducted twice a day through the Website of the Marine Department.

8.      Apart from maintaining the Vessel on watch, the Plaintiffs have conducted a license search of the Vessel.  It revealed that the Vessel was owned by a company called Zhu Sheng Maritime (HK), Ltd. (see page 22 of ‘LCMR-2’). The Plaintiffs had also tried to ascertain the location and trading pattern of the Vessel but such effort ended in vain.

9.      When the Writ was about to expire in April 2008, the Plaintiffs were unable to locate the whereabouts of the Vessel despite various efforts.  As the Plaintiff was unable to effect service of the Writ on the Defendants, an application was made to extend the validity for service of the Writ.  Enquiry was made with the Marine Department which confirmed that no entry/ clearance record could be found as from the date when the Writ was issued (see page 21 of ‘LCMR-2’) and an Order was granted for the renewal of the Writ.

10.    After the renewal, the Plaintiffs continued to seek to trace the location of the Vessel.  Eventually, before the expiry of the renewed Writ, the Plaintiffs proved to be able to trace the location of the Vessel and the Vessel was arrested promptly thereafter.”

14.I am far from satisfied on that affirmation evidence that the Plaintiffs took all reasonable steps.

15.Ms. Li’s 1st and 3rd Affirmations are short on detail as to what steps the Plaintiffs actually took to ascertain the whereabouts of the barge during the initial currency of the Writ.

16.The 1st Affirmation merely asserts that it was not possible to serve the barge during the initial validity of the amended Writ.  No explanation is given as to why precisely it was not possible.

17.The 1st Affirmation states that the Marine Department was asked whether the barge had entered into Hong Kong waters since 13 April 2007.  The Marine Department replied in the negative.  This was not surprising given the barge had been in Hong Kong waters all along. 

18.But the 1st Affirmation offers no explanation why the Plaintiffs or their solicitors assumed that, since time of the incident of which complaint is made in the Writ, the barge had been absent from Hong Kong waters. 

19.This is despite the fact that, from their correspondence with the Marine Department prior to the renewal of the Writ, the Plaintiffs’ solicitors would have known that the barge was owned by a Hong Kong company and was registered here with a Hong Kong licence number.  It seems to me that a more natural assumption would have been that, being a Hong Kong vessel, the barge was likely to be found in one or other of the areas of Hong Kong harbour (including Yau Ma Tei) where barges are typically stationed.

20.The 3rd Affirmation is no more helpful.

21.The 3rd Affirmation continues to assume that the barge has been absent from Hong Kong waters since July 2006, the time of the incident of which complaint is made.  The incident may have taken place in Zhuhai as the 3rd Affirmation states.  But that by itself could not justify the Plaintiffs’ assumption as reasonable.

22.The 3rd Affirmation then deposes to the Plaintiffs having in vain “tried to ascertain the location and trading pattern of the Vessel”.  But no particulars are given as to what those “efforts” entailed.  Did the Plaintiffs, for example, have a look through the Yau Ma Tei harbour shelter?

23.Apparently, after the renewal of the Writ, the Plaintiffs “proved able to be able to trace the vessel”.  But again no particulars are given as to what further types of search or inquiry were conducted following renewal of the Writ.  It is not said why such methods (whatever they might have been) could not have been employed earlier before renewal.

24.The 3rd Affirmation is much too coy over details.  It needs to be far more frank with the Court, if it is to justify the reasonableness of the Writ’s extension.

25.In the circumstances, there is insufficient evidence of the Plaintiffs having acted reasonably to serve the Writ during its initial period of validity.  On the contrary, the Plaintiffs’ difficulty in serving the Writ during its initial period of validity appears to have been self-induced.  The Plaintiffs started off on a wrong assumption (namely, that the barge was outside Hong Kong waters) which does not seem to me to have been justified.

IV.     CONCLUSION

26.For the foregoing reasons, the ex parte extension of the amended Writ should be set aside.

27.I shall now hear the parties on costs and consequential orders.

Mr Andrew Sheppard, instructed by Messrs Crump & Co, for the Plaintiffs

Mr Douglas Lam, instructed by Messrs Tsui & Co, for the Defendants