THE OWNERS OF THE SHIP OR VESSEL "ZHONG HANG YAU NO.1" AND ANOTHER v. THE OWNERS AND/OR DEMISE CHARTERES OF THE SHIP VESSEL "DRAGON NO.1'

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JUDGMENT

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1. On the 3^rd of July 1998 there was a collision in Hong Kong waters between the 2^nd Plaintiff's ship "ZHONG HANG YAU NO. 1" and the Defendants' ship "DRAGON NO. 1" ('the Vessel") and as result of the collision, the 2^nd Plaintiff as owners of cargo on board the "ZHONG HANG YAU NO. 1" and the 1^st Plaintiff as owners of that ship both suffered loss. The Plaintiffs in this Action contend that the collision was caused by the negligence of the Defendants' Vessel and therefore claim has been brought against the Vessel. This is therefore a straight forward case of a collision where there is a maritime lien on the Vessel and typically security should be given to the Plaintiffs for their claim and the case will then take their normal course. Unfortunately this did not happen, as the Defendants did not provide security and therefore the Plaintiffs, as they were entitled to do so by statute, invoked the jurisdiction in rem of the High Court of Hong Kong. Plaintiffs' solicitors received instructions from the Plaintiffs late in the afternoon of the 6^th July to arrest the Vessel and the writ in rem was prepared immediately and taken to the High Court Registry by the litigation clerk. Unfortunately when the litigation clerk arrived at the Registry at 4.20 p.m., he found that the Registry had closed at 4.15 p.m. and therefore the Writ in rem could not be issued that afternoon.

2. The solicitor for the Plaintiffs then checked with the agent of the Vessel and was informed that the Vessel was to sail at 3 o'clock in the morning of the 7^th July 1998 and in the circumstances, an urgent arrest application had to be made the same night of the 6^th July. The Plaintiff's solicitor swore the necessary Affidavit in support of arrest and appeared before the Duty Judge, Mr. Justice Yam at 7.00 p.m. The Affidavit of Mr. Ip dated 6^th July 1998 informed the Court that the Writ had not been issued because of the closure of the Registry. The Solicitor for the Plaintiffs confirmed to the Duty Judge that the Writ in Rem would be issued first thing the next day (7^th July) and the Duty Judge granted a Warrant of Arrest notwithstanding that the Writ in Rem had not been issued. The Vessel was arrested at 10.30 that evening of the 6^th July. Early the next morning the Plaintiffs' Solicitors caused the Writ in Rem to be issued by the High Court Registry and to be served by the Bailiff on the Vessel that same day.

3. The Vessel thereafter remained under arrest as the Defendants did not provide security for the release of the Vessel. Yesterday the 16^th July 1998, by an urgent application on short service, Mr. Day for the Defendants applied to me to discharge the Warrant of Arrest granted by Yam, J. on the 6^th July and for the immediate release of the Vessel. The application was resisted by Mr. Hirst for the Plaintiffs. As a matter of caution, the Plaintiffs also issued an application for the issue of a second Warrant of Arrest in the event that the Court is minded to discharge the first Warrant of Arrest. The questions before the Court are therefore:-

4. At the hearing it is common ground that the granting of a warrant of arrest in an admiralty action in rem is discretionary and not a matter of course although that discretion is almost always granted in favour of the applicants.

5. The basis of the Defendants application to set aside the 6^th July Warrant of Arrest is that the Court has no jurisdiction to grant a warrant of arrest because at that time the Writ in Rem had not been issued and because of Order 75 rule 5(1), the Court has no jurisdiction to grant a warrant of arrest. Order 75 rule 5(1) reads:-

"After a writ has been issued in an action in rem a warrant in Form No. 3 in Appendix B for the arrest of the propeny against which the action or any counterclaim in the action is brought may, subject to the provisions of this rule, be issued at the instance of the plaintiff or of the defendant, as the case may be."

The other material provisions of Order 75 rule 5 are as follows:-

6. It was however not so much the wording of Order 75 Rule 5(1) of the Rules but the Judgment of Mr. Justice Keith in the case of The Dragon Supreme [1997] 3 HKC 405 which gave vigour to the Defendants' application to set aside the warrant of arrest. In The Dragon Supreme an application was also made to the Duty Judge during the weekend when the Registry was closed and when the writ in rem could not be issued and when the Affidavit leading to the warrant could not be filed. Keith, J. refused the ex parte application on the basis that Order 75 Rule 5 laid down two requirements before a warrant of arrest can be granted, namely the issue of a Writ in rem (Rule 5(1)) and the filing in the Registry of the Affidavit leading to the warrant of arrest (Rule 5(4)). Since both of these requirements were not met because of the weekend closing of the Registry, therefore the learned Judge held that he had no jurisdiction to grant the warrant and he refused the ex parte application of the plaintiff.

7. Mr. Hirst does not accept the contention of two statutory requirements disabling the Court from granting warrants of arrests in the evenings and weekends when the Registry is closed. Nor does he accept the correctness of The Dragon Supreme. A number of arguments were advanced as to why Yam, J. had the jurisdiction and the discretion to grant the 6^th July Warrant of Arrest. As I have formed the clear view under the second issue that the second Warrant of Arrest should be issued, it is not necessary for me to discuss in any detail the correctness of The Dragon Supreme, which was of course a judgment based on an ex parte urgent application. What is material for me on this first issue is whether it can be clearly shown that Yam, J. had wrongly issued the 6^th July Warrant of Arrest and that clearly he had no jurisdiction to do so. I am not persuaded that this is the case and I would here merely mention a few of the points made in the course of the arguments to illustrate that there are a number of ways looking at the problem:-

8. In the circumstances, having regard to urgent nature of the present application and that I have not heard full arguments on the various interesting and difficult points, by way of a somewhat tentative view I am not satisfied that the 6^th July 1998 Warrant was wrongly issued. It follows therefore that on the first point, I am against the Defendants.

9. My main reason that the Vessel must not be released however is based on my conclusion that in any event the second Warrant should be issued. This is really a very straight forward point. The Writ had been correctly served on the 7^th July and there is no application to set aside the service of the Writ in rem. Mr. Day in his submission confessed that if at any time next week or next month, the Vessel comes back to Hong Kong then the Vessel can be validly arrested. Then why should it not be arrested now immediately after the first Warrant was set aside (assuming that I am wrong and it should be set aside): Fair justice certainly calls for such step to be taken to protect the interest and the statutory right of the Plaintiffs conferred by Section 12B of the Ordinance. Mr. Day submits that there had been an abuse of the process and that the Plaintiffs should not be allowed to benefit from their abuse and he refers to The Vasso. For me The Vasso has no relevance because in my view there had been no abuse of the process, no material non disclosure to Yam. J. The Plaintiffs had simply failed to satisfy the requirements of Order 75 rule 5(1) and (4) which are harsh requirements and there is nothing to suggest that the Plaintiffs deliberately misled the Judge or deliberately did something they knew they should not do. At the worse, there had been a mistake and the correction of the mistake is in the setting aside of the first Warrant. But why should that prevent the Court from issuing the second Warrant as otherwise all the requirements of Order 75 rule 5 leading to the granting of the warrant have been satisfied. The Defendants had refrained from giving any security and the only effective way to protect the interests of the Plaintiffs is to cause the issue of the second Warrant of Arrest. Whatever prejudice suffered by the Defendants could be cured by an appropriate order of costs but the prejudice to the Plaintiffs if the second Warrant of arrest is refused could be extremely serious and having regard to the Defendants' pointed failure to provide security and their adamant position of seeking to obtain the release of the Vessel so that it could be immediately sailed away, I have no doubt that in all the circumstances, justice would be better served by the exercise of my discretion in favour of the Plaintiffs. In my judgment, the alternative application of the Plaintiffs for the issue of a second Warrant of arrest succeeds and deserves to succeed.

10. I will now hear the parties on costs and on the various matters arising out of the two applications.