KINGSTAR SHIPPING LTD. v. THE OWNERS OF THE SHIP "ROLITA" (PANAMANIAN FLAG) AND ANOTHER

Headnote

    Admiralty. Jurisdiction in rem. Tests to be satisfied when jurisdiction challenged The St Elefterio [1957] P 179 followed.

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J U D G M E NT

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Kempster, J. A. :

1. This is an appeal by Mr Lee Chung Shun, who carries on business under the style of Garful Maritime Co and is the defendant and intervener in the action, from an order made by Deputy Judge Cruden on 11 August 1988, In substance Mr Lee complains of the judge's refusal to set aside t the writ in rem issued on 29 July for want of jurisdiction. The propriety of the warrant of arrest of the MV "Rolita ''issued on 21 August and of a particular affidavit are matters also raised by the Amended Notice of Appeal The issues arising have thoroughly and persuasively been argued before us.

2. The relevant Jurisdiction of the Supreme Court of Hong Kong derives from the Colonial Courts of Admiralty Act 1890 which, by section 16 came into force here on 1 July 1891. More particularly sections 150(2) and (3) of the Supreme Court Act 1981 allowed Her Ma majesty by Order in Council to direct that the earlier statute should have effect as if for the reference in section 2(2) to he Admiralty jurisdiction of the High Court in England there was substituted a reference to section 20 of the latter statute and also to direct that any of the provisions of sections 21 to 24 should extend to any colony subject to such adaptations and modifications as might be specified. By Article 3 of the Admiralty Jurisdiction (Hong Kong) Order 1985, which was Statutory Instrument No 1197 of that year and came into force on 13 November, section 21 of the Supreme Court Act 1981 was extended to Hong Kong. Its material terms are as Follows :-

" ... (4) In the case of any such claim as is mentioned in section 20(2)(e) to (r) " - by section 20(2)(h), this includes "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship" where -

(a)     the claim arises in connection with a ship; and

(b)     the person who would be liable on the claim in an action in personal ("the relevant person") was, when the cause of action 'arose, the owner or charterer of, or in possession or in control of, the ship, an action in rem may,(whether or not the claim gives rise to a maritime lien on that ship) be brought in the High Court against:-

(i) that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that shin as respects all the shares in it or the charter of it under a charter by demise ..."

3. These provisions, which substantially follow those of section 3(4) of the Administration of Justice Act 1956 are reflected in the terms of Order 75 Rule 5(8) of the Rules of the Supreme Court;still unamended but effective by reasons of section 77 of the Interpretation & General Clauses Ordinance (Cap 1).

    The General indorsement on the writ reads :-

"The Plaintiffs claim damages as charterers of the defendants' ship "Rolita" for breach of a charterparty concluded on or abut 9 June 1988 for the loss suffered by them in consequence of the Defendants' breach of the said charterparty.

The plaintiffs claim damages for breach of an agreement between the plaintiffs and worldlink Shipping Lines Co SA whereby the latter agreed on behalf of itself or its nominee, the defendants, to charter the defendants' ship "Rolita" to the  plaintiffs, for the Loss suffered by them in consequence of the defendants' breach of the said agreement".

The plaintiffs', with section 21(4) of the 1981 Act  to mind, thus put their case in the alternative. If worldlink were still the beneficial owners of the "Rolita" on 29 July they contend hat such company would, if the plaintiffs' Contentions are made good, be found liable to them in personam for damages for breach of the charterparty and also to have been the owners or charterers or in possession or control of the ship when the cause of action for such breach arose. If, as he claims, Mr Lee was the beneficial owner on 29 July they contend, mutatis mutandis, that he would be found liable to them In personam and also to be the owner or charterer or in possession or control of the ship when the cause of action for breach of the charterparty arose. No question of election arises at this juncture.

4. The dates when the charterparty is said to have been concluded or breached or when the' plaintiffs' cause of action arose are not specifically alleged either in the  indorsement or in the affidavits sworn in support of the application for a warrant of arrest. However by Respondents' Notice filed by leave at the outset of this hearing, the plaintiffs eschew the judge's finding that the cause of action must have arisen if and when, contrary to his earlier finding, the charternarty was concluded and opt firmly for 29 July when, by issue of writ, they accepted the conduct of Mr Lee in concluding a repugnant charter or in signifying by telex on 28 July 1988 an intention not to be bound by the alleged charter to the plaintiffs or both as amounting to repudiation By reason of the manner in which they put their case it is apparent that the plaintiffs make like allegations against worldlink in the alternative. It would have assisted this Court if the 'Respondents' Notice had heen explicit in such regard but it is substantially in relation to Mr Lee that, in my view, the plaintiffs stand in the stronger position in the context of jurisdiction.

5. When the Jurisdiction of the court is challenged it is incumbent upon the party seeking to uphold that jurisdiction to show that jurisdiction existed; where necessary by evidence.The I Congreso del Partido [1978 ] 1 QB 500; The International Tin Appeals 29 April 1988 (Unreported) per Ralph Gibson and kerr LJJ. As Slynn J said in The "Aventicum" [1978] 1 Lloyd's Rep 184 at p 190:-

"I ask myself what seems to be the right question : Have the plaintiffs satisfied me on the balance of probabilities by their evidence that here the Person who was the owner of the vessel at the time the cause of action arose is the person now at the time the proceedings are launched who beneficially owns all shares in the vessel?"

6. In the instant case, as regards Mr Lee at least, we have his affirmed assertion that he was the beneficial owner of the vessel on 29 July which, on the plaintiffs' case, is not only the date when the cause of action arose but also "the time when the action was brought" within the meaning of section 21(4) of the 1981 Act. That "the claim arises in connection with a ship" is common ground. The only way in which jurisdiction can be challenged, therefore, is on the basis that he would not "be liable on the claim in an action in personam". But, as was pointed out by Willmer J in The St Elefterio [1957] p 179 at p 186 and quoted by Deputy Judge Cruden :-

"The words used .... are 'the person who would he Liable" not 'the person who is liable' and it seems to me, bearing in mind the purpose of the Act, that the natural construction of those quite simple words is that they mean the person who " would he liable on the assumption that the action succeeds".

In England this approach has been followed most recently by the Court of Appeal and the House of Lords in Samick Lines v Owners of Antonis P Lemos [1985]  AC 711 and in Hong Kong in Sin Hua Enterprise Co Ltd v Owners of Motor Ship Harima [1987] HKLR 770 It presently involves an assumption in relation to all the facts and matters advanced by pleading or evidence in support of the claim against Mr Lee. Telexes and other documents are exhibited sufficiegt to demonstrate at least negotiations for the agreement alleged to have been concluded between 9 June and 6 July 1988, concurrently it may be observed with negntiations for the sale of the ship to worldlink or its nominee, for the charter by Worldlink or its nominee to the plaintiffs of the "Rolita". Further while the words "or nominee" are less apt to disclose the existence of an undisclosed principal than "as apents" they are equivocal. Mr Lee was, the evidence suggests involved in the sale of the vessel by Kam Lee Navigation SA, a company controlled by the plaintiffs to Worldlink on 7 June 1988 since he received the address commission and interest on deposit monies at Worldlink's direction. Conversely Mr Koh, the president of Worldlink, continued to concern himself with repairs to the vessel some time after the sale to Mr Lee and when, on 6 July, Worldlink telexed an intention to "honour our agreement to timecharter back" they were already negotiating a resale to Mr Lee. By 26 July, when they gave a further assurance, "Rolita" had alread been in Mr Lee's control for a week and chartered elsewhere. In the premises the matters alleged by Mr Murray in paragraph 18 of his first affidavit sworn on behalf of the plaintiffs go beyond bare assertion. If the eventual proof of such matters he assumed the plaintiff's will establish a claim in personam against Mr Lee for breach of a charterparty concluded between him, by his agents Worldlink, and themselves.

7. It would follow from the foregoing conclusions that there was Jurisdiction to issue the writ in rem but Mr Dick on behalf of Mr Lee based his argument on appeal upon the judge's finding that no charter-back was ever concluded; a finding in relation to which no point is taken in the Respondents' Notice albeit a belated attempt to amend that document was made and refused. Section 20(2)(h) of the 1981 Act postulates, Mr Dick submits the need for the plaintiffs to satisfy the Court that an agreement relating to the use or hire of a ship was indeed concluded; the The St Elefterio approach being confined to the allegations of breach and damages For my part I am unable to construe that subsection, read together with the words "the person who would be liable on the claim in an action in personam" in section 21(4)(b) in that way. Reference to the International Convention relating to the arrest of seagoing ships signed at Brussels on 10 May 1952, permissible in the event of ambiguity as pointed out in Samick Lines v Owners of the Antonis P Lemos, does not persuade me otherwise. One has only to turn to section 20(2)(f) of the Supreme Court 1981, to which the same construction must be applied, to show why. That subsection, in context reads :-

"20(l) The Admiralty jurisdiction of the High Court shall be as follows that is to say -

(a) jurisdiction to hear and determine any of the questions and claims mentioned in subsection (2);.....

(2) The questions and claims referred to in subsection (1)(a) are-.....

(f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or in consequence of the wrongful act neglect or default of -

(i) the owners, charterers or persons in possession or control of a ship; or

(ii) the master or crew of` a ship or any other person for whose wrongful acts, neglects or defaults the owner, charterers or persons in possession or control of a ship are responsible.

being an act, neglect or default in the navigation or management of a ship, in the loading, carriage or discharge of goods on, in or from the ship, or in the embarkation carriage or disembarkation of persons on, in or from the ship;"

8. Looking at those words, contrasted with the simpler terms of section 20(2)(h), it would, in my view, he impossible to contend that an appropriate combination of these various alternatives must be established to the satisfaction of the court if the Admiralty jurisdiction is subjected to challenge. Thus in relation to (h) where we have the expression "any claim arising out of any agreement relating to .... the use or hire of a ship" the word "claim" must embrace the whole. The fact that a claim is made resulting from an alleged breach of an alleged agreement of the nature required suffices. To summarise that conclusion section 21(4)(b) should in the instant be construed to read:-

"The person who would be liable on the claim in an action in personam ("the relevant person") arising out of an alleged agreement relating to the,use or hire of a ship was, when the cause of action.... ".

The St Elefterio approach covers the agreement as well as the breach, the establishment of the cause of action and damages. Looking back to the circuestances of that authority the status of the bills of lading there in issue was not accepted as going to jurisdiction.

9. In the light of what may be described as a broad construction of sections 20(2)(h) and 21(4) of the 1981 Act I would dismiss this appeal.

Fuad V.-P :

10. I agree that, for the reasons given by my Lord, this appeal should be dismissed.

Power, J.A.

11. I also agree and have nothing to add.