SHANGHAI HAIXING SHIPPING CO. LTD. v. HARVEST FILL SHIPPING LTD.

1996, C.L. No. 351

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

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J U D G M E N T

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1. In this action the Plaintiff shipowner sues the Defendant charterer for freight. The parties signed a charterparty dated 5th October 1996, whereby the Plaintiff agreed to charter the vessel "Ning An 10" to the Defendant for a voyage between Newcastle Australia to Shajiao, South China for the carriage of 37,000 metric tonnes of coal in bulk. The vessel was duly loaded and the Plaintiff claims payment of freight consequent upon the voyage. The actual amount claimed in the Statement of Claim is the sum of US$347,877.12. Notwithstanding demands therefor, the Defendant has not paid this sum.

2. Miss Kong, who appears for the Plaintiff in this application for summary judgment, has usefully provided a skeleton argument wherein she points out, amongst other matters, that freight constitutes a long-established exception to the general rule of set off. She maintains that the Plaintiff is entitled to freight under the terms of the charterparty and that no deductions or counterclaims can be made. Under the terms of the charterparty, she says, freight has become due and payable, and in light of the fact that the Defendant has admitted that it entered into the charterparty with the Plaintiff, that fact is conclusive, and accordingly freight has been due and payable since November 1996.

3. The evidence in support of the Plaintiff's Order 14 application, which is by summons dated 24th January 1997, is effectively uncontradicted. The Defendant has responded to the application in terms of the affidavit of Mr. Chiu Kwok Wing, partner of Messrs. Chan & Chiu, who are the solicitors of record for the Defendant in these proceedings. Mr. Chiu's affidavit, which was dated 1st February 1997, takes the matter as far as he was able upon the then state of his instructions. However, with respect, that is not very far. What the Defendant is saying, through Mr. Chiu, was that in light of the fact that the sub-charterers owed the Defendant itself a sum due in freight, and that the Plaintiff had been asked not to release the subject goods to the sub-charterers pending payment of such outstanding freight, that that was sufficient to found a defence.

4. I am unimpressed with this argument. It is but briefly outlined, contains no particulars, and in any event, as Miss Kong says, is not good in law. As Miss Kong maintains, freight is due and payable and is not susceptible to deductions and counterclaims. Indeed, it seems to me that the best that the Defendant could have hoped for, had the matter been properly pursued, would have been to argue that there should have been a stay of execution of the judgment herein, pending trial of a counterclaim based upon a wrongful release of goods, and damages consequent thereon. However, the matter is not pursued in that vein, and does not, for the reasons I have given, stand in the way of my ordering judgment in favour of the Plaintiff on this summary judgment application. As a postscript to this purported defence, Miss Kong points out that as far as she is concerned the papers in the case give a strong indication that sub-freight has in fact been paid to the charterers, who have not onpaid such moneys to the owners, and that, in any event, her instructions are that the goods were indeed released against production of the relevant Bill of Lading.

5. Be that as it may. I am satisfied, on the face of the papers before me, that there is no defence to this action, and accordingly I order that the Plaintiff shall have judgment in the principal sum of US$347,877.12. Interest will be payable on the said sum from 28th November 1996 to today's date, the date of judgment, at 1% over HIBOR, and thereafter interest will be payable on the principal sum as from the date of judgment until payment thereof at the relevant judgment rate. The costs of and occasioned by this action must, it follows from the foregoing, be also paid by the Defendant to the Plaintiff, and include, of course, the costs reserved at the call-over hearing on 5th February 1997.

6. That deals with the Plaintiff's Order 14 application. For the sake of completeness, I should add that the Plaintiff also sought to make a parallel application for judgment on admissions pursuant to Order 27 rule 3. However, the conversation which was said to constitute the admission as to the fact of freight being due and payable has been disputed in Mr. Chiu's affidavit, and I do not consider that this is an appropriate case for an Order 27 rule 3 application. Accordingly, insofar as such be relevant, I dismiss that particular application with, in the circumstances, no order as to costs.

7. There is one further matter to be canvassed. By a summons dated 24th March 1997, issued by Mr. Chiu of Messrs. Chan & Chiu, the solicitors for the Defendant, Mr. Chiu sought an Order that his firm cease to act for the Defendant in the action, and that time for service of that application be abridged. That summons came before me yesterday morning at 9:30, that is on 26th March 1997. I adjourned that application, and made it returnable at this afternoon's hearing. By his affidavit in support, Mr. Chiu makes it quite clear that he has had considerable difficulties in obtaining any significant instructions from his client. He tells me in this evidence that he has been attempting, in correspondence with his client, to obtain full instructions, but that he has had no success. Indeed, he clearly finds himself in some considerable difficulty this afternoon, and he has been able to do no more than to re-affirm the points that appeared in his original affidavit responding to the Plaintiff's Order 14 application. He has also told me from counsel's table, which I accept, that further and in any event he has had no additional costs on account from his client, and that such moneys as he had been given for the defence of this case have been exhausted. He has been left high and dry, so to speak. He is able to get no instructions from his client on the substantive issue, and he is out of funds. Accordingly, he asks for an order that he be permitted to cease to act, and I am minded to grant that order in terms of the relief sought in his summons, although Mr. Chiu does not pursue his costs of this application. The situation in which he finds himself, it seems to me, is entirely consistent with the cursory treatment accorded by the Defendant to the Plaintiff's claim.

8. There is one additional issue. It is basically a housekeeping matter. On 10th December 1996 the Plaintiff obtained a Mareva injunction against the Defendant. This was granted by Mr. Justice Seagroatt in Chambers. This Order was continued, by Order of Mrs. Justice Le Pichon, dated 13th December 1996. In turn, that Order was continued by Mrs. Justice Le Pichon, by Order dated 3rd January 1997. The Order itself simply records the continuation of the Order originally granted by Mr. Justice Seagroatt, but, ex abundante cautela, Miss Kong now asks that the Order of Mrs. Justice Le Pichon of 3rd January 1997 be continued until further Order. Miss Kong informs me that the Mareva injunction has been served on the Hongkong and Shanghai Bank, and naturally she wishes that the injunction remain in place while she investigates what moneys, if any, have been frozen pursuant to the Mareva injunction. Accordingly, I order, if such be necessary, that the Order dated 3rd January 1997 be continued until further Order.

9. There is, I think, nothing further to be done in this case, and it remains only for me to thank both Miss Kong and Mr. Chiu for their assistance.

Dated 27th March 1997