XCHRX VICTORY STAR SHIPPING COMPANY S.A. v. THE OWNERS AND ALL THOSE INTERESTED IN THE SHIP 'AMIGO' AND WORLD HAPPY SHIPPING LIMITED

1991 No. AJ115

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

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Admiralty action in rem against:
the Ship or Vessel 'AMIGO' (St. Vincent Flag)

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JUDGMENT

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1. On 8th October 1991, I ordered that the warrant of arrest which had been issued on 11th May 1991 should be set aside. I adjourned sine die the Defendant's application for consequential relief. The matter has now been restored by summons dated 28th September 1993 by which the Defendant seeks a direction that its loss and damage occasioned as a result of the wrongful arrest be assessed by a Master in Chambers.

2. The background to this application is canvassed in some detail in the decision which I delivered on 8th October 1991. I do not propose to rehearse it again. Suffice it to say that I ordered the warrant of arrest to be set aside on two grounds. First, material non-disclosure upon the application to the Registrar for the issue of the warrant. Second, because the statement of claim disclosed no reasonable cause of action.

3. The law is not in dispute. Damages may be recovered if a ship is arrested by reason of mala fides or crassa negligentia. The Evangelismos (1858) Swa. 378 provides a statement of the law by the Privy Council and a useful illustration of its application. There had been a collision. The plaintiff arrested the wrong vessel. At p.381 the Right Hon. T. Pemberton Leigh, giving the opinion of their Lordships said:-

" It is urged by the Appellant that damages ought to have been awarded in addition to costs, according to the practice of the Admiralty Court, because the arrest was improper. On the other hand it is said that the arrest of the ship was the foundation of the action, and therefore was not an illegal or improper act. Their Lordships think that there is no reason in this case for giving damages. Undoubtedly, if the arrest of the ship is an act of mala fides, or of that crassa negligentia from which the law implies malice, the Court of Admiralty would be justified in giving damages, as in an action brought at common law damages might be obtained. In the Admiralty Court however the proceeding is very convenient, because in the action in which the main question is disposed of damages may be awarded.

The real question in this case comes to this :- Is there, or is there not, reason to say that the action was so unwarrantably brought, or brought with so little colour, so little foundation, that it implies malice on the part of the plaintiff, or that gross negligence which is equivalent to it? Their Lordships are of opinion that there is nothing whatever to establish the Appellant's proposition. It is true the identity of the vessel was not proved; but there were circumstances which afforded ground for believing that the Evangelismos was really the vessel which came into collision with the Hind."

4. A further explanation is afforded by The Walter D. Wallet [1893] P 202. There the vessel was arrested by a defendant who had been, but no longer was, a part owner of the vessel, having forgotten or forgotten the importance of that fact. The President, Sir Francis H. Jeune at p.208 said:-

" In the present case, I think that actual damage there was none. I doubt if, as was urged before me, the ship could have been arrested, when she was, by any proper process, though perhaps an injunction to prevent leaving port until the stipulated policies were given, and the stipulated sums paid, could have been obtained. But she was not detained in port by the arrest, nor was her loading interfered with. Still, the action of the defendants was, I think, clearly, in common law phrase, without reasonable or probable cause; in common law phrase, without reasonable or probable cause; or, in equivalent Admiralty language, the result of crassa negligentia, and in a sufficient sense mala fides, and the plaintiffs' ship was in fact seized. Therefore, I think the plaintiffs must be supposed to have suffered some damage, and I fix that damage at 1l."

5. Various other authorities were cited to me. These authorities did not affect the principle upon which damages may be awarded. They simply afforded further examples of the application of the principle. The only assistance to be derived from them is that each case very much depends upon its own facts.

6. There is no doubt that the Defendant has a strong case. Prior to the commencement of this action, the Plaintiff had taken proceedings against the Defendant to recover the balance of the purchase price of the vessel, and against an individual on a cheque which had been given for that balance. Such proceedings were, of course, wholly inconsistent with the claim in this action for recovery of possession of the vessel. It was those inconsistencies, which were not revealed to the Registrar upon the application for the warrant, coupled with a wholly ineptly drafted statement of claim and a total lack of explanation by the Plaintiffs of their conduct, that led to the decision which I made in October 1991.

Taken in isolation, however, the Plaintiff's claim for possession of the vessel, the basis for which is contained in the affirmation of Mr. Michael Ling, the Plaintiff's agent, would not have been without merit. Doubtless the deficiencies in the statement of claim could have been cured, had there been no other relevant factors. In essence, the Plaintiff says that property in the vessel was to pass only upon payment of the balance of the purchase price because of the difficulties which the Defendant had in completing the purchase. The Plaintiff retained all the original documents, furnishing the Defendant with copies only. It was by using such copy documents that the Defendant was able to achieve an improper registration in a foreign registry. As Miss Wee for the Plaintiff put it, the two earlier actions were an unfortunate way of proceeding but were no more than a form of alternative pleading to the effect that the Defendant should pay the balance of the purchase price failing which, property not having passed, the Plaintiff wished to recover possession of the vessel.

7. The matter is very finely balanced. The cases give no real assistance. Each of the two cases to which I have referred might very well have been decided the other way. One might be forgiven for thinking that the arrest of the wrong vessel is rather more heinous than mere oversight of capacity on the part of the arresting party. Taking all matters into consideration, I am not persuaded that the Plaintiff's conduct, bungling and inept though it may have been, amounts to mala fides or crassa negligentia.

8. As a secondary position, Mr. Chong for the Defendant argued that even if the initial arrest was not without reasonable or proper cause, the arrest was unduly continued after 24th May 1991 when the Plaintiff was notified in writing by the Defendant's solicitors that the statement of claim lacked any reasonable cause of action. In The Cheshire Witch (1858) Br. & Lush. 362, the plaintiff's claim was dismissed with costs. The plaintiff obtained leave to detain the vessel for a further 12 days while considering whether to appeal. There was no such appeal. The plaintiff was condemned in damages in relation to the 12 days' detention. Similar authority for this proposition may be found in The Margaret Jane (1869) L.R. 2 AS & E 345.

9. It is true that the Defendant's solicitors did point out the inconsistencies in the statement of claim, on the one hand to claim the balance of the purchase price and on the other to claim possession of the vessel. Having regard to my view of the Plaintiff's overall conduct, however, I am equally unpersuaded that that the arrest was unduly continued. It is worth perhaps remembering, as Miss Wee emphasised, that the Defendant obtained the vessel and somehow effected registration to enable it to embark upon a venture for the Defendant, yet the Defendant had not and, as far as I am aware, still has not paid the balance of the purchase price.

10. Accordingly, I dismiss the Defendant's application. I make an order nisi that the Defendant pays the costs of the application.