THE TAI YANG HE

HCAJ322/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 322 OF 1998

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Admiralty Action in rem against the ship or vessel "TAI YANG HE" and the
four ships or vessels listed in the schedule annexed to the Writ

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J U D G M E N T

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1. I have before me an application for default judgment in action HCAJ199/2000 brought by the plaintiff, Elf Lubricants Hong Kong Ltd, and a further application by the two respective plaintiffs in the two different actions (that is HCAJ199/2000 which, for convenience, I will call the second action, and in HCAJ322/1998 which I will call the first action) for payment out of the sums now in court which was paid in, pursuant to an order made by Yam J on 21 August 2000, copy of which can be seen at pages 133-134.

2. The history of this matter is somewhat complicated and unusual. The claim in the first action was brought by cargo owners, who claim to have suffered damages as result of the breach of contract and the first action was brought in rem and it is not necessary for me to go into the detailed reasons why no security was obtained except to say that the vessel ran away whilst under arrest. But judgment was entered in that first action by an order of Yam J, and the judgment sum as could be seen at page 134 was US$52,717.92 up to 21 August 2000. With accrued interests at judgment rate, the judgment sum payable to the plaintiff in the first action should now come to US$67,146.

3. The absconding of the vessel in the first action resulted in the vessel, the subject matter of the second action being the subject of execution by the plaintiff in the first action. What happened is that the vessel "He Fa" came to Hong Kong and by a simultaneous process of both arrest in the second action by the plaintiff, Elf Lubricants Hong Kong Ltd and execution by the plaintiff in the first action, the vessel was detained. The vessel was released again around 21 August 2000 because money was agreed to be paid in (the sum of HK$1,193,400) to answer as the security for the judgment in the first action and for the judgment in the second action. "He Fa" was therefore released. It was, Mr Yang, who says, he was the owner of "He Fa" and that it was not the subject of the claim and that in fact the amount that have been paid in should not be paid in because "He Fa" could not legitimately be arrested or executed on and the applications for the release of security paid in were issued respectively on 3 and 7 March 2001. These applications are somewhat complicated and they took a bit of time. I believe I had to give directions in relation to these applications before the hearing could properly take place. The hearing took place on 4 and 5 July. At the end of the hearing I gave judgment against Mr Yang and the vessel and in favour of the plaintiffs. I held that the applications failed with costs. So that was the state of affair on 5 July. I understand, subsequent to the delivery of that judgment, a notice of appeal was put in but so far no step had been taken for the appeal to be heard and no date had been fixed for the hearing of the appeal.

4. So far as today's various applications before me is concerned, a few of the matters can be dealt with fairly easily. I have no problem in coming to the view that the default application for judgment in the second action should succeed and I order judgment to the plaintiff in the second action in the sum of US$40,751.36, which is inclusive of interests up to today. I also order that the plaintiffs in that second action is entitled to its costs of the application as well as costs of the action itself which of course will include things like costs of the arrest. By way of gross sum assessment under the Order 62, rule 9(4)(b), I assess the total costs of the action and of the application (excluding from it in that gross sum assessment the costs of the failed application of March 2001) and I assess the costs in the sum of $50,000.

5. What is problematical is the payment out. I can see no problem and I order that the payment out should be as follows. From the amount in court plus accrued interest, they should be paid out:-

(1) To the plaintiff in the second action the judgment sum inclusive of interests of US$40,751.36.

(2) To the same plaintiff in the second action HK$50,000 as being the gross sum assessed costs.

(3) To the plaintiffs in the first action the judgment sum of $67,146 which is of course inclusive of interests up to today.

(4) To the plaintiffs in the first action the sum of HK$105,715.39. This is a sum for the costs in that first action that had been assessed by Yam J by his order at page 134 and I have included some interests at judgment rate on that sum and that is why the sum that I sanction the payment out in relation to costs in the first action (excluding costs of failed application of March 2001) is HK$105,715.39.

6. The amount that had been paid in was $1,193,400. Accrued interest on that fund up-to-date would probably be another $44,000, if the rate of interest from August 2000 to now is at the rate of say 3%. So one ought to be looking at up-to-date, a total figure in court of about $1,238,152.50. The amount that I have ordered to be paid out comes to a total of Hong Kong dollars (having converted the US dollar at $7.8) $997,314.79. So there would still be left in court the sum of about $240,000.

7. By my order of 4 July, I ordered that the applicants in the applications of March 2001 by Mr Yang and the owners of the vessel, should be jointly responsible to those plaintiffs for the failed applications. I have before me the affidavit of Mr Baker in relation to the failed applications which sets out a disbursement of $250,000 and also large solicitor's costs incurred by the plaintiffs. I have also put before me, in a summary form, costs of the plaintiffs for the failed applications. The solicitor's costs alone came close to $800,000 and disbursement is $254,572, but of course included in that disbursement is a small cost for the arrest of the vessel.

8. It seems to me that on a proper taxation of that costs which had been awarded in favour of the plaintiffs, the plaintiffs are likely to recover a sum at least in excess of $600,000. I express in the course of the hearing that I suspect a proper figure would probably be close to $800,000. The question before me is whether I should order the payment out of the remaining sum, the balance left in the court after the payment out of the first four items I mentioned, as being part payment of the plaintiffs' costs in the failed applications. I can see that the plaintiffs are going to have a shortfall. It seems to me that there is no reason to wait for the full taxation to take place when the amount will be ascertained. So notwithstanding my inability today to do a gross sum assessment for the costs of the failed applications (I did not do it not because that there is any merits in the submission made to me by Mr Chan but out of abundance of caution in order to reduce further unnecessary costs) and even in the absence of a gross sum assessment, I can see no injustice in ordering the remaining sum, the balance in court after the payment out of the first four items to be paid to the plaintiffs' solicitors and I so order.

9. Mr Chan has raised the question of the pending appeal. A pending appeal normally does not work as a stay of execution. There is no stay of execution application before me. It seems to me that if there is any complaint, then that complaint should be addressed to the legal advisors handling this matter. There is, as far as I can see, no injustice in ordering the payment out. If there was an intention to genuinely pursue the appeal, action will have been taken and steps should have been taken in relation to the application to pay out which have been launched something like nearly a month ago. I am not in any way, persuaded from staying the order which I have just made merely by reason of the existence of a notice of appeal. I should also point out that in any event, Mr Yang, who is foreigner, would likely be ordered to put up security for any appeal which would be high, probably in excess of $300,000. It seems to me that this is a matter that should be disposed of as soon as possible, and that if there is any application to be made, I have no doubt the solicitors handling the matter for the appellant can bring an urgent application to the court of appeal. The order therefore is that there will be payment out to the plaintiffs in the way I indicated.