INTRALINE RESOURCES SDN BHD v. THE OWNERS OF THE SHIP OR VESSEL "HUA TIAN LONG"

HCAJ 59/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO.59 OF 2008

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Admiralty action in rem against: the ship or vessel

“HUA TIAN LONG” (People’s Republic of China Flag)

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REASONS   FOR   DECISION

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The application

1.  There is before the court an application by the plaintiff herein, by summons dated 15 May 2008, for, inter alia, a stay pending appeal to the Court of Appeal of the Order of this court dated 9 May 2008, whereby the defendant owner of the vessel “Hua Tian Long” was ordered to provide security for release of the vessel from arrest, in the sum of US$65 million, such security to be provided in a manner acceptable to the plaintiff, alternatively in a manner to be decided by the Registrar.

2.  As originally drawn, the summons also sought (at paragraphs 1 and 2 thereof) that the Order of this court dated 9 May 2008 be not drawn up and perfected, and that the Order should be recalled, and that further evidence should be admitted and further argument should be heard upon the issue of the appropriate amount of security.

3.  However, I am told that the Order in fact was perfected on 9 May 2008, thus rendering otiose the first two paragraphs of the relief thus sought.

The order thereon

4.  At the conclusion of the hearing of this summons, this court refused to grant a stay of its order in the manner sought, that is, pending the appeal by the plaintiff of the order of 9 May 2008, and instead confined its order to an order that there be an interim stay only, and that such interim stay was to remain in place solely until the conclusion of a directions hearing before Hon Ma CJHC, which I am informed presently is scheduled to be heard tomorrow, that is, 20 May 2008, at 10 am in Chambers.

5.  As to the costs of this application for a stay pending appeal, the court further ordered that the costs of and occasioned by the application are to be costs in the appeal.

The background

6.  The background to this case, and to the arrest of the vessel “Hua Tian Long”, is fully set out in this court’s Reasons for Judgment which were handed down on 14 May 2008.

7.  That document is self-explanatory, and was urgently written in anticipation of a possible appeal, which itself was foreshadowed by an oral application for an interim stay made by the plaintiff’s solicitor, Mr Chan, immediately consequent upon the court giving its order as to the quantum of such security at 4.30pm on 9 May 2008.

8.  Accordingly, there is no necessity further to advert to the relevant circumstances of this case.

The hearing this morning

9.  At the hearing at 10.15am this morning, Mr Sussex SC – who had not appeared on the initial application to fix the amount of security – drew the attention of the court to the Notice of Appeal against this court’s decision to award the sum of US$65 million, which Notice was filed on 16 May 2008, and has been amended as at the same date.

10.  It is this Notice of Appeal which no doubt will be spoken to before Ma CJHC at the directions hearing on 20 May 2008.

11.  Mr Sussex made it clear that in his view this court had been plainly wrong in its order fixing the sum to be provided as security for release, and thus his client wished to correct the error, and thus obtain a considerably larger sum in security.

12.  On behalf of defendant owners, Mr Wright made it clear that in the circumstances the defendant was perfectly prepared to offer an undertaking not to seek the release of the vessel until the conclusion of the hearing on 20 May 2008 before Ma CJHC, and further noted that in any event this application at this stage essentially was academic.

13.  Whilst the plaintiff in fact now had been sent a draft Bail Bond in the sum of US$65 million which was underwritten/backed by the China Merchants Bank, this Bond had not yet been accepted, and it was possible that, absent such acceptance by the plaintiff, the Registrar would have to decide if this large domestic Chinese bank was acceptable, or to order an alternative form of security.

14.  Moreover, Mr Wright drew the attention of the court to the provisions of Order 75, rule16(4), the provisions of which provide that there is to be a 24 hour period after the service of notice of bail to be put up before the bail bond can be filed, and at the same time relevant affidavits must be filed (as to service of notice of bail and as to the credit worthiness of the surety – vide Order 75, rule 2.)

15.  Accordingly, said Mr Wright, there was no chance in the current circumstances of the court being asked to release this vessel prior to the hearing before the Chief Judge on 20 May 2008, hence his undertaking in the terms as proffered.

16.  To this Mr Sussex responded that unless and until he had a definitive decision of the court of first instance in terms of his client’s substantive application for a stay pending appeal, he was in no position to take the issue of a stay further before the Court of Appeal.

17.  Procedurally I consider that Mr Sussex is correct, hence my order granting an interim stay only, and refusing to grant any further stay pending appeal.

18.  The Court of Appeal may take a different view, but for my part I am satisfied that this application for the fixing of the quantum of security to be furnished by the defendant owner was fully and fairly entertained, and that the decision of this court was reached after careful and detailed consideration of evidence which in my view indicated that the plaintiff’s position as to the provision of security – wherein the initial figure as sought of US$59 million increased within but a matter of several days to US$140 million – at the least bordered upon the oppressive; indeed, at paragraph 97 of the Reasons for Judgment I comment that I retained a suspicion that even the amount of US$65 million as ordered “may well prove to be on the high side”.

19.  Accordingly I took the firm view at this morning’s stay application that it would be unfortunate if, as a consequence of the appellate process, and the time inevitably required for this to run its course,  that the plaintiff effectively was in a position to prevent release from arrest of  this vessel notwithstanding the defendant owner furnishing – albeit in acceptable form – the amount of bail so ordered by this court.

20.  Accordingly, in the exercise of my discretion I declined to grant any stay representing any longer than the minimum period in order fairly to permit the plaintiff to present its case for a stay pending appeal to the Chief Judge.

Finally

21.  In light of the time constraints before tomorrow morning’s hearing before Ma CJHC, and the need of the parties to prepare therefor, I have taken the unusual course of this afternoon sending by fax these Reasons for Decision to the solicitors acting for both parties.

22.  I shall, however, formally cause these Reasons to be handed down in the normal manner tomorrow morning, thus ensuring that they are placed upon public record.