GOLDEN METRO CHINA LTD v. THE OWNERS OF THE SHIP OR VESSEL SKY LUCKY

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HCAJ 194/2006

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D E C I S I O N

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1.  This is an application for a stay of judgment pending appeal.  On 4 July this year, Reyes J gave judgment for the Plaintiffs in the sum of US$1.5 million and, on an application for a stay before him, he refused the application but he granted a stay until 5 o’clock this evening so that an application could be made before this court; hence, this application was made somewhat in haste.

2.  The action relates to the sale of a vessel which was initially to be bought by the Plaintiffs from another company for US$6.5 million under what has been referred to as the Head MOA.  The judgment below sets out the history of what took place and it is unnecessary to go into all the details of how initially the Plaintiffs had considered selling the ship to another party but the Defendants came on the scene and there was a sub-MOA.  The effect of that was that the Defendants would pay a total of US$8 million for the ship.  There was then a nomination agreement under which the rights and liabilities under the Head MOA were transferred to the Defendants so that the Defendants would take delivery of the ship.

3.  The question, then, that was really before the court below was whether the Plaintiffs’ entitlement to the US$1.5 million under the sub-MOA was dependent upon the existence of three conditions.  These are set out in the amended defence and counterclaim and I set them out here.  They were as follows:

(a)  the vessel (in particular, her main engine, auxiliary engine, mooring gear and rudder system and boiler) would be fully repaired to a satisfactory condition at delivery;

(b)  the vessel’s spare parts, ordinarily stored ashore, the value of which is around US$800,000 to US$1 million, would be placed on board the vessel, to be delivered together with the vessel;

(c)  the Plaintiffs would invest the sum of US$800,000 into the Defendants’ company and take part in the management of the vessel and to provide technical support for the management of the vessel.

4.  Before going into the judge’s findings in respect of that, I have to say that I find those supposed conditions to be virtually unenforceable.  The first, that the vessel would be fully repaired to a satisfactory condition at delivery, seems to me to be something which is somewhat nebulous in itself.  What is satisfactory to one person might be not be satisfactory to another.  According to the judge’s finding in the judgment, the vessel was, indeed, inspected on behalf of the Defendants some time prior to delivery and found to be satisfactory.  Another point that could be made on that supposed condition is that there was no time at which the Plaintiffs would have had possession of the vessel in order to effect any repairs, because the vessel was being used by the original owners right up until the time it was delivered to the Defendants, in accordance with the nomination agreement.

5.  Turning to the second point, this seems to be me to be a question of whether the spare parts were sold as part of the sale of the vessel.  One cannot simply have a side agreement between somebody who is not selling the vessel, or who does not own the spare parts, that the spare parts would be placed on the vessel and delivered together with the vessel.  If the main MOA agreement does not provide for any spare parts with the vessel, that seems to me to conclude the matter.  As it is, again, the supposed condition seems to me to be totally unparticularised.  It is not as if there was said to be any list of spare parts or any identified or known spare parts.  What is meant by “spare parts” is neither set out there, or anywhere else, as far as I can see.

6.  Finally, there is question of whether the Plaintiffs should invest $800,000 in the Defendants’ company.  According to the judge’s finding, the Defendants’ company was completely unknown to the Plaintiffs and the notion that the Plaintiffs should suddenly invest $800,000 into a company with a person he does not know is a little bit difficult to understand.

7.  Be all that as it may, that is on the very face of the pleadings itself.  But then, when one goes to the judge’s findings - and I do not propose to go through them because they are all self-explanatory and they are much better set out than I could set them out here - it seems to me quite clear that the judge came to the conclusion that there was no such agreement as to these three conditions and he sets out his assessment of the evidence having considered the evidence as he heard it and in relation to the facts as they existed at the time and as to whether those conditions were at all likely.  If one then takes into account the fact that the agreements between the parties were in writing, and these agreements were supposed to be supplementary oral agreements, the difficulties that arise are manifest.

8.  I regret that having considered this judgment and having heard the arguments and received the submissions in respect of it, I cannot see that there is any reasonable prospect of this appeal succeeding, at any rate at this stage.  I have been urged that this court should wait before drawing any such conclusions until the transcript is available.  Transcripts are one thing.  No doubt the parties kept their own notes of the evidence but I have not been shown any notes of the evidence which would indicate that the judge had misinterpreted any of the evidence.  I can only proceed upon what is before me and I regret I have to come to the conclusion that at this stage I cannot see any reasonable likelihood of this appeal succeeding.  Had I done so, I might have been disposed to order that the money which has been in court as part of a cash bail, namely, US$1.7 million, should remain there, but I do not consider that at the moment it would be right not to grant the Plaintiffs the relief which it seeks, which is the release of that money.

9.  There is also an application for security for costs in respect of the appeal.  I propose to adjourn that.  That was brought on speedily because this application for a stay pending the appeal has been brought on at short notice, for reasons which I have already indicated.  I do not consider that the application for security for costs is fully complete yet and I would not wish to make any assessment of any security that should be granted without seeing a proper breakdown of the likely costs, rather than a global estimate, which is all that the Plaintiffs has been able to be provided at the moment.  Furthermore, there may be other matters which I have to take into consideration on an application for security.

10.  As regards the application for a stay, I regret that I can see no alternative but to refuse that.