Centel Shipping Co Ltd v. The Owners and/or Demise Charterers of the Ship or Vessel “King Coal” or As May Be Describing the Property Against Which the Action Is Brought

HCAJ 171 /2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO 171 OF 2012

________________

Admiralty action in rem against: the ship or vessel “KING COAL”
or as may be describing the property against which the action is bought

AND

HCAJ 174/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO 174 OF 2012

________________

Admiralty action in rem against: the ship or vessel “FEARLESS I”
or as may be describing the property against which the action is bought

________________

____________

JUDGMENT

____________

1.This is an application under each of the actions to set aside the writ of arrest and to strike out the writ itself on the basis that the plaintiff’s claim does not come within the requisite admiralty jurisdiction provided under the High Court Ordinance (Cap 4) (“the Ordinance”).  Alternatively, the defendant owners seek to set aside the warrant of arrest on the basis that there was material non-disclosure at the time when the application for writ of arrest was made before the ex parte judge.

2.The background facts of this case are not, in any substantive way, in dispute and I will not repeat them.  These have been set out in both sides’ skeletons, especially in Mr Alder’s skeleton which has not been subject to any dispute by Mr Wright in his skeleton.  In any way I have looked at the affirmations, and the facts are largely common as to the matters leading to the application for the writ of arrest.

3.I will deal with these two applications together because I think they raise the same issues, effectively. 

4.The primary legal basis relied on by Mr Alder for the owners to set aside the writ is that the claim brought by the plaintiff, being the assignee of the wages due to the Master and crew members of the relevant ship, does not come within the meaning of section 12A(2)(n) of the Ordinance, because those words provide clearly that it will only include any such claim made:

“…by a Master or member of the crew of a ship for wages (including any sum allotted out of wages adjudged by a superintendent to be due by way of wages).” (emphasis added)

5.Mr Alder’s submission is a simple one:

(1)   On the basis of this provision, it is plain that only a claim made and brought by a member of the crew or Master himself will fall within this particular provision and, therefore, within the maritime claim anticipated under section 12A of the Ordinance, whereby a right in rem would arise. 

(2)   In the present case, the plaintiff is only an assignee of the alleged outstanding crew wages.  It is not a Master or member of the crew. Therefore, the claim brought by it does not come within the court’s admiralty jurisdiction, and no in rem right arises.

6.Mr Wright, for the plaintiff argues, with some force, that according to Lord Diplock’s observation in The Eschersheim [1976] 1 WLR 430 at 436C, one has to construe s 12A(2), if possible, consistently with Article 1 of the 1952 Arrest Convention.

7.The Convention, says Mr Wright, in the relevant subparagraphs only provides that a “claimant” means a person who alleges that a maritime claim exists in his favour, and does not require a claim in relation to “wages of the Masters, Officers or crew” to be brought only by the master of member of the crew.  Mr Wright therefore submits that the intention or objective of the Convention is only to limit or focus on the nature of the claim, instead of the identity of the person who could bring a claim. 

8.Therefore, counsel further contends, as one has to construe it in line with the Convention (as observed in The Escherheim), s 12A(2)(n) of the Ordinance should be construed to mean any claim in respect of wages of Master or officer or crew and it does not matter who brings it. 

9.Although Mr Wright’s submissions sound initially attractive, with respect, on a closer analysis I have to reject it. 

10.What Lord Diplock has said in Escherheim at p 436C to D is that the language of the statutory provision (thus s 12A(2)(n) of the Ordinance in the present case) should be construed in the same sense as that of corresponding provision of the Convention, if the words of the statue are reasonably capable of bearing that meaning. 

11.Thus, even taking Lord Diplock’s said observation to the highest, in my view, I cannot construe the statutory provision in a way which is contrary to the clear express words of the provision itself.  In other words, I cannot give the statutory provision a meaning in the same sense as that of the corresponding provision of the Convention, if the Convention meaning is contrary to the express words of the statute.  The statutory provision would not be “reasonably capable of bearing that meaning”. 

12.In my view, the legislature in enacting Section 12A had decided to expressly introduce these particular words: “Any claim by a Master or member of the crew” in section 12A(2)(n).  That is what the legislature had done by clear words.   There may or may not be good reasons for that, but it is not for this court to speculate those reasons. 

13.In light of the express words and the way s 12A(2)(n) is drafted, the clear words of it mean that it is only limited to a claim for wages brought by the Master or a member of the crew.  I therefore do not think it is reasonably capable of construing it to mean (as what Mr Wright has suggested) a claim in respect of wages of Master and officers or crew members brought by anyone.  

14.To assist his construction of s 12A(2)(n), Mr Wright further relies on the argument that, as a matter of principle, a statutory right in rem is in law assignable.   Thus, he says, the statutory provision should construe to include those assignees.

15.I do not accept that.  Even if I assume (without deciding) that as a matter of law, a statutory right in rem is assignable, that does not add anything to the construction of paragraph (n), because paragraph (n) are drafted in clear words.  Whether in law this right is or is not assignable is, I think, neutral to the construction of these express words.    

16.For these reasons, I come to the conclusion that the plaintiff’s claim as an assignee does not come within the admiralty jurisdiction of this court under section 12A(2)(n) of the Ordinance.   On this basis alone, the writ itself, and therefore also the writ of arrest, should be set aside.  

17.In relation to this, by way of a proposed amendment to add the names of the crew members to the writ to be part of the plaintiffs, Mr Wright tries to rescue the problem of jurisdiction.  He suggests that this would make the crew members also plaintiffs in this claim to comply with the requirements under s 12A(2)(n).

18.As I can see it, this will not help because, at the time when the claim was issued and mounted before the ex parte judge to obtain the ex parte order of arrest, the members of crew had already got paid and they had assigned the “debt” to the plaintiff.  There was therefore at that time no valid existing claim for wages by the crew members, and as a result, they could not properly mount a claim for wages which would fall under section 12A(2)(n) of the Ordinance. 

19.In any event, as a matter of exercising my discretion, I would not have allowed the amendment even if I had found it arguable that by adding the crew members to the plaintiffs, it would have rendered the claim falling within the admiralty jurisdiction back to the time when it was issued.  It is precisely because of this “relation back” doctrine of the effect of the proposed amendment, I am of the view that it would be wholly unfair to the defendants for the plaintiff to have been able to come to apply for the writ of arrest without a proper jurisdiction, and then after having arrested the ship, to found the jurisdiction by subsequently amending the writ to - so to speak - complete the jurisdiction.  I do not think it is fair and right in all the circumstances of this case (including what I would say more later about the grounds of material non‑disclosure ) to allow the application to amend. 

20.For the above reasons, I will also refuse the application to amend.

21.Insofar as Mr Alder’s application to set aside the writ of arrest on the basis that there had been material non-disclosure, given my conclusion above, I do not think it is necessary for me to rule on that. 

22.But for completeness, in case I were required to rule on this, I would have accepted that there was material non-disclosure in this present case even if I had found that that the plaintiff’s claim fell within the admiralty jurisdiction.  I would mention briefly below on what I would regard as material non-disclosure in the present case. 

23.Firstly, I think insofar as the questionable nature of the jurisdiction is concerned in bringing the claim as mentioned above, there is material non disclosure in the following way:

(1)   The applicant through its solicitor when appearing before the ex parte judge rightly drew to the attention of the learned judge the fact that O75 r5(i) spelt out that it had to be a claim brought by the Master or member of the crew. After doing that, she further cited to the judge certain paragraphs relating to the right of “subrogation to wages lien if payment made with leave of court” in Meeson, Admiralty Jurisdiction and Practice (3^rd ed) to apparently address the difficulty the plaintiff’s claim may face under s 12A(2)(n). 

(2)   However, in doing this, the solicitor did not at the same time highlight to the judge that (a) there is a distinct difference in principle between a right of subrogation (which is not the present case for the plaintiff) and an assignment (which is the present case), (b) there is apparently no authority to show that the principle relating to subrogation of maritime liens on wages could simply apply to an assignment situation, and (c) there is in fact a clear authority in Hong Kong which says that maritime lien for wages is not assignable (See: The Sparti [2000] 2 Lloyd’s Reports  618 at 623 per Waung J).

(3)   In light of plaintiff’s own anticipated potential challenge to its right to arrest on the basis of lack of jurisdiction, in my view, the matters identified at subparagraph (2)(a), (b) and (c) above are clearly relevant to the ex parte application and should have been disclosed to the learned judge.  The failure to do so amounts to material non-disclosure.

24.Second, given the circumstances of this case, it should also have been relevant for the plaintiff to disclose to the ex parte judge a number of facts.  These include the fact that (a) Maryville, being the manager of the chartered vessel, the charterer and the assignee, ie, the plaintiff, are all members of the same group of companies[1], (b) the owners had already issued notices to the charterer very close to the time of the issue of the writ that they (the owners) were going to terminate the charter very soon because of the charterer’s failure to pay the hire, and (c) the crew members and Master had threatened to sign off from the service of the vessel because of the charterer’s failure to pay their wages.

25.I believe these facts would be relevant to the judge’s exercise of discretion in deciding whether or not to grant the writ of arrest, because these would give rise to a consideration as to whether there was an abuse by the plaintiff of the admiralty and arrest jurisdiction of this court:  

(1)   Had the charterer themselves discharged the obligation to pay the crew members’ wages, they would not have any right or claim (whether in rem or in personam) to look to the defendants as owners of the vessels for such payments.

(2)   However, by not discharging their own obligation to pay the crew, the plaintiff (which comes from the same group of companies of the charterer) paid off the crew members.  As a result, not only that the charterer had continued to have the use and benefit of the service of the crew members (who had threatened to sign off their service for lack of payments) and thus the use of the vessels, the plaintiff would also have been able to mount an in rem claim against the defendants and secure such payment by arresting the vessels.

(3)   The arrest was also made possible by the charterer by (a) disregarding the owner’s said notice to terminate the charter, and (b) specifically directing the vessel to come to Hong Kong after being given the notice. 

26.I therefore would have also set aside the writ of arrest on the basis of material non-disclosure.

(The court went on to discuss costs with the parties)

Mr Colin Wright, instructed by Brenda Chark & Co, for the plaintiff

Mr Edward Alder, instructed by Reed Smith Richards Butler, for the defendants