CORPORATION NACIONAL DEL COBRE DE CHILE AND OTHERS v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE BARGE OR VESSEL "TUNG SHING NO.8"

HCAJ237/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION

ACTION NO.237 OF 1999

-------------------

Admiralty Action in rem against
the ship or vessel "TUNG SHING NO.8"

-------------------

-------------------------

J U D G M E N T

-------------------------

1. This is an application by the plaintiffs for sale pendente lite of the vessel Tung Shing No.8. The vessel, having been arrested sometimes towards the end of August, had not been released because the plaintiffs and the defendant could not agree on what should be the proper security for the vessel.

2. The application by the plaintiffs for sale of the vessel was resisted by the defendant. The difference between the parties is as to what ought to be the proper security that should be given for the release of the vessel. The plaintiffs require a security of $1.2 million and the defendant was willing to offer a security of $800,000. Each side relies on their own respective experts, the range of value given by the plaintiffs' expert for this barge is between $1.2 million and $1.5 million. The value given by the defendant's expert for this vessel is around the $770,000 mark, having given a range of value of between $700,000 and $900,000.

3. It is notoriously difficult for the admiralty court to reach a firm decision as to what is the precise value of a vessel. The best way, of course, to realize the value of the vessel is by a public sale. In order to resist an order for public sale, the defendant owner normally would have to satisfy the court that the security that the defendant is offering is reasonable and is at least equivalent to the value of the ship as may be realized by a public sale.

4. Mr Ng for the defendant, in his forceful submission, has attempted to persuade this court that the court should allow the vessel to be released by accepting the defendant's offer of payment into court of $800,000. There is much force in what he says, but I am afraid I cannot agree with his submission. In my view, there is much room for debate as to what ought to be the proper value of the ship.

5. The reliance upon the sale of a similar vessel, the Hang Fung, in August, was criticized by the plaintiffs as being a below market sale because of the poor financial position of the owner of Hang Fung at the time. It was also suggested by counsel for the plaintiffs that that example chosen of Hang Fung was a particularly selective example.

6. There may be force in that. It is impossible at this stage to say what would be the true value of the vessel - whether it would be as low as $800,000 or much higher than the $1.2 million or $1.5 million suggested by the plaintiffs. What I can be certain is that the court cannot be satisfied that the vessel is bound to be worth as low as $800,000. This being the case, it seems to me that the normal procedure of the court should be followed and that the vessel ought to be sold by way of the usual public tender. I therefore make an order in terms of the motion as prayed for.

7. There is however, at the end of the submission of Mr Ng, a suggestion that I should provide in my order an escape route, the escape route being that the defendant be given an opportunity to pay into court a sum which reflects closely the security that is acceptable to the plaintiffs, taking into account the matter of the costs of the arrest and costs of the sale of the vessel which would be inevitable if the vessel is to be sold by public tender.

8. It seems to me that this is a reasonable suggestion and that it may result in total savings to everyone, both in terms of time and expense. So I do accede to that request and I make an order that in the event that the defendant do pay into court the sum of $1.1 million within 7 days of this order, the vessel will be released and the order for sale be rescinded.