STELLAR OCEAN TRANSPORT LLC v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL “RUBY STAR”

CACV 133/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 133 OF 2014

(ON APPEAL FROM HCAJ NO. 126 OF 2013)

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J U D G M E N T

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Hon Cheung JA :

The appeal

1.1     The intervener, Asset Wonder Limited (‘Asset Wonder’), challenged the jurisdiction of the Court in respect of the claim lodged by the plaintiff Stellar Ocean Transport LLC (‘Stellar Ocean’) pursuant to Order 12, rule 8 of the Rules of the High Court.  Ng  J dismissed the challenge.  The intervener now appeals against the judgment.

1.2     Ng J had also separately refused an application by the Stellar Ocean seeking judgment in default of acknowledgment of service.  This is not the subject matter of the appeal.

The parties

2.1     Stellar Ocean was the ship manager of the vessel ‘Ruby Star’ (‘the vessel’) under a ship management agreement dated 20 December 2009 (‘SMA’) (‘the contract’) with the defendants Stellar Shipping Corporation Limited (‘Stellar Shipping’) the demise charterers of the vessel.

2.2     Asset Wonder is the registered owner of the vessel. Stellar Shipping became the demise charterers of the vessel pursuant to a bareboat charter dated 14 January 2010 (‘Charter’) entered into with Asset Wonder.

Source of the Admiralty jurisdiction

3.1     The Admiralty jurisdiction of the Court of First Instance of the High Court is conferred by section 12A(1) of the High Court Ordinance (Cap 4) (‘HCO’) in respect of questions and claims set out in section 12A(2).  The relevant ones for the purpose of this appeal are sections 12A(2)(l) and (o) :

‘ (l) any claim in respect of goods or materials supplied to a ship for her operation or maintenance;’

‘ (o) any claim by a master, shipper, charterer or agent in respect of disbursements made on account of a ship;’

3.2     Section 12B provides :

‘ (1) Subject to section 12C [not relevant to this case] an action in personam may be brought in the Court of First Instance in all cases within the Admiralty jurisdiction of that court.

……

     (4) In the case of any such claim as is mentioned in section 12A(2)(e) to (q), where―

(a) the claim arises in connection with a ship; and

(b) the person who would be liable on the claim in an action in personam (‘the relevant person’) was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship,

an action in rem may (whether or not the claim gives rise to a maritime lien on that ship) be brought in the Court of First Instance against―

(i)    that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that ship as respects all the shares in it or the charterer of it under a charter by demise; or

(ii) any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respects all the shares in it.’

Stellar Ocean’s claim

4.1     I will go into the details of Stellar Ocean’s claim as this is relevant to Asset Wonder’s challenge to the Court’s jurisdiction.

4.2     By a letter dated 9 April 2013, Stellar Ocean informed Stellar Shipping that,

‘ you owe us USD 3,593,902 as on 31^st Dec 2012 towards Management costs & Management fees for managing your vessel MV Ruby Star vide Ship Management Agreement dated 20^th December 2009.’

4.2.1     The letter demanded payment of this sum and the detailed statement of accounts is said to be attached to the letter.   

4.3     By another letter dated 3 July 2013, Stellar Ocean demanded payment of US$769,593 from Stellar Shipping on the same basis as the previous letter but for the period as on 30 June 2013.

4.4     In the Indorsement of Claim of the writ, Stellar Ocean claimed against Stellar Shipping for :

‘(i) monies due and owing to them in respect of goods, materials and services supplied to the vessel for her operation and maintenance and/or disbursements made on account of the vessel at the request of [Stellar Shipping], its servants and/or agents by [Stellar Ocean] as agents of [Stellar Shipping] and/or the vessel; and/or

(ii) monies due and owing to them in respect of goods, materials and services supplied to the vessel for her operation and maintenance and/or disbursements made on account of the vessel at the request of [Stellar Shipping], its servants and/or agents pursuant to a contract dated 20 December 2009 [‘the SMA’]; and/or

(iii) Damages.’

4.5     The Statement of Claim identified the monies ‘due and owing’ by Stellar Shipping in the sums of US$3,593,902 and US$769,593.  Paragraph 9 of the Statement of Claim set out the particulars of the claim :

‘ 9. From January 2011, SSC [i.e. Stellar Shipping] started defaulting on payments to SOT [i.e. Stellar Ocean]. SOT continued to provide the Management Services and, in so doing, is entitled under the SMA [i.e. the contract] to payment of the following costs and expenses incurred on SSC’s behalf.

PARTICULARS

9.1. Between January 2011 and December 2012 :

9.1.1. SOT’s costs and expenses under SMA totalled USD 8,695,340.  The underlying accounts were audited by SOT’s auditors, Kothari Auditors and Accountants, and approved by SSC.  A copy of these accounts is attached and marked “SOC-4”.

9.1.2. The Vessel earned an income of USD 10,575,678.  More than half was used for payment to AWL, leaving USD 5,101,438 to SSC’s credit.

9.1.3. Pursuant to cl. 7.2 of the SMA, SOT exercised its right of set off and applied SSC’s credit to the total costs and expenses.  The balance still owed to SOT under the SMA is USD 3,593,902.

9.1.4. By notice to SSC dated 9 April 2013, SOT demanded payment of this 2011/2012 Debt.  A copy of the notice is attached and marked “SOC-5”.

9.2. Between January and June 2013 :

9.2.1. SOT’s costs and expenses under SMA totalled USD 3,050,989.

9.2.2. The Vessel earned an income of USD 2,281,396.  Of this, USD 653,125 was paid to AWL, leaving USD 1,628,271 to SSC’s credit.

9.2.3. Pursuant to cl. 7.2 of the SMA, SOT exercised its right of set off applying the credit to the total costs and expenses.  The balance still owed to SOT under the SMA is USD 769,593.

9.2.4. By notice to SSC dated 3 July 2013, SOT demanded payment of this January to June 2013 Debt.  A copy of the notice is attached and marked “SOC-6”.

9.3. July 2013 :

9.3.1. On 15 July 2013, SOT issued a writ of summons in action in rem (pursuant to Ord. 75, r. 3) against the Vessel.  A copy of the writ, which is the basis of this claim, is attached and marked “SOC-7”.

9.3.2. On or around 20 July 2013, AWL arrested the Vessel alleging that SSC had failed to pay hire due and owing under the Charter.

9.3.3. Around the end of July 2013, SOT was informed that the Charter had been terminated and that it was to handover the Vessel to AWL.

9.3.4. By notice to SSC dated 29 July 2013, SOT demanded USD 4,885,921, which was comprised of : (i) the 2011/2012 Debt; (ii) the January to June 2013 Debt; (iii) the estimated costs and expenses for July 2013 of USD 100,000; and (iv) the cost of bunkers on board the Vessel at redelivery (USD 422,000).  A copy of the notice is attached and marked “SOC-8”).’

4.6     Paragraph 13 of the Statement of Claim identified Stellar Ocean’s right to an action in rem :

‘ SOT’s right to an action in rem

13. The above claims in debt or, alternatively, damages give rise to statutory liens on the vessel because :

13.1. Pursuant to section 12A(2)(l) of the High Court Ordinance (‘HCO’), the claims are in respect of goods or materials supplied to a ship for her operation or maintenance;

13.2. Pursuant to section 12A(2)(m) of the HCO, the claims are in respect of the construction, repair or equipment of a ship or in respect of dock charges or dues;

13.3. Pursuant to section 12A(2)(n) of the HCO, the claims are for officers’ and crew wages;

13.4. Pursuant to section 12A(2)(o) of the HCO, the claims are by an agent in respect of disbursements made on account of a ship; and,

13.5 Pursuant to section 12B(4) of the SCA 1981 :

13.5.1. Each of the above claims arose in connection with a ship and (when the causes of action arose) SCC, who is liable on the claims in action in personam, was the demise charterer of and/or in possession or in control of the vessel; and,

13.5.2.    SSC was demise charterer of the vessel when the action was brought (i.e. the writ was issued on 15 July 2015(sic)).’

4.7     The Further and Better Particulars of the Statement of Claim dated 3 January 2014 stated that :

Of US$3,593,902

‘ In respect of the expenses that were incurred for the period January 2011 to December 2012, after deducting bank payments, our client utilised the funds on account of US$5,101,438 against payments in respect of management fees, insurance payments, general expenses, brokerage, port DA expenses, crew salaries and technical expenses. The balance of US$3,593,902 as claimed in the Statement of Claim is therefore in respect of the balance bunker costs. The bunkers were supplied to the Vessel for her operations; our client had to pay for the bunkers to enable its purchase.’

4.8     Similar particulars were provided of the other sum of US$769,593.

The grounds of objection to jurisdiction

5.     The grounds of objection to jurisdiction set out in Asset Wonder’s summons on jurisdictional challenge are :

1) The plaintiff, as manager of the vessel, brings this action to recover the balance of account due to it by Stellar Shipping, the demise charterers of the vessel.

2) The plaintiff and Stellar Shipping dealt with one another on the basis of a running account, in which debits or claims potentially within the Admiralty jurisdiction of this Court were intermixed with debits which could never give rise to Admiralty jurisdiction.  

3) By reason of its dealing with Stellar Shipping on the basis of a running account, the plaintiff must be taken to have appropriated all credits or payments to that running account, with the result that the payments were de facto appropriated to the debit entries appearing in that account in the order in which they appeared.

4) Having appropriated all credits or payments to the running account, the plaintiff could not afterwards vary that appropriation, which the plaintiff has since purported to do by appropriating credits or payments to debits otherwise than in the order in which they appear in the account, and to other matters not appearing in the account.  

5) There is no Admiralty jurisdiction in respect of a claim for the balance of a mercantile account.

Ng J’s decision

6.     In addressing the grounds relied upon by Asset Wonder, the Judge held that :

1) Stellar Ocean’s ledgers show that there is no running account between Stellar Ocean and Stellar Shipping of the debits and credits with regard to the vessel.  They contain only an itemised breakdown of the outgoings and receipts for the vessel during the relevant periods : they are just a historical representation of what transactions occurred in relation to the operation and management of the vessel.  As far as outgoings are concerned, they comprise several items, some of which are clearly within the in rem jurisdiction of the Court e.g. provision of crew services and bunker, some clearly outside it e.g. insurance: The Sea Friends [1991] 2 Lloyd’s Rep 322.  (paragraph 15)

2) The summary of accounts show that what actually happened was that Stellar Ocean used the receipts in respect of the vessel to first pay off ‘Bank Payments’, being the hire due from Stellar Shipping to Asset Wonder under the Charter, and left the balance i.e. ‘Net Funds’ to meet all operational expenses and management fees.  The summaries of accounts do not show that Stellar Ocean has indiscriminately offset both in rem and in personam claims in the course of its dealings with Stellar Shipping during the periods in question – historically, there was no offset of any claims for operational expenses, whether in rem or in personam. (paragraph 16)

3) The claims stated in the demand letters are for the sums of US$3,593,902 and US$769,593 respectively, being the difference between the ‘Net Funds’ and the totality of the operating expenses and management fees.  Similarly, in paragraphs 9.1 and 9.2 of the Statement of Claim, Stellar Ocean is claiming the two lump sums without attributing the claim to any particular item(s) of operating expenses in question.  Claiming a lump sum without attributing it to any particular item(s) of operating expenses is consistent with Stellar Ocean not having made any appropriation, and not the other way round.  A fortiori, when Stellar Ocean have made clear its intention to assert a maritime claim against the vessel in the letters, although they have wrongly described their maritime claim as ‘maritime lien’.  (paragraph 17)

4) There is no account current between Stellar Ocean and Stellar Shipping and what happened was this : Stellar Ocean did not intend to make and has not made any appropriation of the ‘Net Funds’ to any particular item(s) of operating expenses, rather it intended to reserve its right up to the last moment. Hence, its claim for the lump sums without attributing them to any particular item(s) of unpaid operating expenses at the time of the writ or the Statement of Claim.  The rule in Clayton’s Case, (1816) 1 Mer. 585, has no application to this case.  (paragraph 20)

5) There is no entry in Stellar Ocean’s ledgers applying a receipt to a particular debt.  There is nothing in the demand letters which convey the impression, meaning or intention on the part of Stellar Ocean to attribute the ‘Net Funds’ to any particular item(s) of operating expenses.  Stellar Ocean is entitled to exercise its right of appropriation up to the last moment.  On the materials, the first time Stellar Ocean has made its intention plain was when it served its Further and Better Particulars of the Statement of Claim.  (paragraph 22)

6) Following the approach in The ‘Kommunar’ [1997] 1 Lloyd’s Rep 1, provided that the underlying nature of the claim falls within one of the recognised maritime claims under section 12A(2) of the HCO e.g. (l) ‘any claim in respect of goods or materials supplied to a ship for her operation or maintenance’, it is difficult to see why the mere fact that this claim happens also to be the remaining balance of a general account between a plaintiff and a defendant should make any difference to the in rem nature of the claim.  The fact that the Court may have to settle accounts between merchant and agent is not a sufficient reason to adopt a mechanistic approach to the construction of section 12A(2) of the HCO.  (paragraph 28)

7) While paragraph 9 of the Statement of Claim is silent on the matter, in the Further and Better Particulars, Stellar Ocean’s solicitors explained that the claims for US$3,593,902 and US$769,593 were in respect of ‘bunker costs’, after utilising the funds on account of US$5,101,438 and US$1,628,271 to pay off other operational/management expenses shown in the summaries of account.  In other words, Stellar Ocean has elected to appropriate the ‘Net Funds’ on account to expenses other than bunker costs.  (paragraph 29)

8) At the very least, the bulk of Stellar Ocean’s claim i.e. US$3,593,902 and US$769,593 out of a total claim of US$4,885,921 is within the Court’s in rem jurisdiction under section 12A(2)(l) of the HCO as being ‘any claim in respect of goods or materials supplied to a ship for her operation or maintenance’.  That is sufficient to give the Court Admiralty jurisdiction: The ‘Oriental Dragon’ unrep. HCAJ 162 of 2012; 9 December 2013.  (paragraph 31)

Asset Wonder’s ‘new’ grounds

7.1     In this appeal Mr Sussex no longer relies on the running account ground.  Further, contrary to his position below, he no longer contends that there had been appropriation to such an account.  Instead, relying on the Judge’s finding, he contends that there was no appropriation of the money to the bunker claim prior to the issuance of the writ and it was only made some time prior to the service of the Further and Better Particulars. 

7.2     Mr Sussex submitted that the breakdown of the two sums claimed did not show the ‘net funds’ were applied to any specific claims.  All that the particulars can show is that the two sums are debts owing by Stellar Shipping to Stellar Ocean.  One simply cannot tell from these two sums the claims fall within section 12A(2)(l) as a ‘claim in respect of goods and materials supplied to a ship for her operation or maintenance’ which brings the claim within the Admiralty jurisdiction of this Court.  He argues that the Court cannot assume jurisdiction because the ‘bulk of the claim is within the Court’s in rem jurisdiction’ as the Judge said in paragraph 31 of the judgment.

7.3     He further accepts that if the plaintiff’s claim does in fact fall within the Admiralty jurisdiction conferred by Section 12A of the HCO, then that jurisdiction can be exercised in rem by virtue of Section 12B(4).  But the issue on this appeal is whether the claim as advanced fell within the Admiralty jurisdiction at all.

Stellar Ocean’s position

8.     Mr Coleman SC, counsel for Stellar Ocean opposes the appeal on these grounds :

1) It is not open to Asset Wonder to change its position and rely on a new ground pertaining to a challenge of the Court’s jurisdiction which was not raised before.

2) The particulars of the claims showed that the two sums were in fact for the bunker claim.  Further the appropriation of payments towards the non in rem claims occurred before the action was commenced.

Order 12, rule 8

9.1     Order 12, rule 8 provides the means for a ship owner to challenge jurisdiction without submitting to the jurisdiction.  Re  Resource 1 (2000) 3 HKCAFR 187 at page  211 makes clear that the rule ‘is intended to be a comprehensive and exclusive code for the taking of jurisdictional objections’. 

9.2     There is no controversy that the Admiralty jurisdiction is statutory.  It is conferred by section 12A of the HCO. It is also, as Mr Sussex submitted exorbitant, because section 12A(7) provides that it exists ‘in relation to all ships … whatever the residence or domicile of their owners may be’ and ‘in relation to all claims, wherever arising’.  Scrutton LJ stated in The ‘Tervaete’ [1922] P 259 that ‘it is now established that procedure in rem is … a means of bringing the owner of the ship to meet his personal liability by seizing his property’.

9.3     The consequence is that, provided that a claim falls within the Admiralty jurisdiction of the Court of First Instance, a ship owner is constrained by an action in rem to come before the Hong Kong Court if he wishes to protect his property.  But the in rem jurisdiction cannot be used to force a ship owner to come before the Court to answer a personal liability which does not fall within the Admiralty jurisdiction. 

9.4     Where the jurisdiction of the Court is challenged, a plaintiff has to show by evidence on a balance of probabilities that jurisdiction existed : see The Rolita [1989] 1 HKC 160 at 163.

My view

1)  Challenge not based on new ground

10.1     Although Mr Sussex no longer pursues the case of running account and appropriation before action, I do not consider Asset Wonder’s jurisdictional challenge is now based on an entirely new ground.  The essence of the original objection is that Stellar Ocean has not able to show that the two sums are in respect of in rem claims within the ambit of section 12A(2)(l).  What Mr Sussex has done is to use a different route to reach this conclusion. 

10.2     In my view what Mr Sussex advances in this appeal comes within the ambit of the objections set out in the summons.  I do not consider Sir Anthony Mason’s statement in Re Resource 1 at 214 that ‘save perhaps objections on the ground that the Court of First Instance has no Admiralty jurisdiction at all’ after referring to Order 12, rule 8 as the comprehensive code for taking jurisdictional objections, would assist Mr Sussex.  That case was concerned with challenge to jurisdiction lodged after the prescribed time.  The issue here is simply whether the grounds now advanced by Asset Wonder falls within the ambit of the objection or not.  In my view Mr Sussex is entitled to take this point, particularly when the matter goes to something as fundamental as jurisdiction.  If there is no jurisdiction, the Court should decline to hear the case.

2)  The claims are for debts

11.1     The details of the two sums claimed by Stellar Ocean can be better seen from the following tables attached to the Further and Better Particulars :

11.2     There is no dispute that of the Item B operating costs and management fees, the following items are non in rem claims, namely, insurance, brokerage and Port DA, general and management fees.  The in rem claims are crew salary and bunker.  It is not clear what ‘technical’ is.  Specifically bunkers clearly come within the definition of goods in section 12A(2)(l) : see Berlingieri on Arrest of Ships (5th Ed) at page 101, The Neptune [1985] HKCFI 236 and Halsbury’s Laws of Hong Kong - Maritime Law (2nd Ed) at paragraph 250.028 (footnote 3).

11.3     Mr Coleman referred to Table 1 and argues that although the insurance, brokerage and Port DA, general and management fees (totalling US$2,321,039) are non in rem claims, applying the balance of US$2,780,399 (US$5,101,438 – 2,231,039) available to be set off against the remaining items resulted in the balance of US$3,593,902 (which is less than the bunker claim alone).  Therefore, the balance of US$3,593,902 comprised only in rem claims.  He adopts the same argument in respect of Table 2.

11.4     I have difficulties with Mr Coleman’s submission.  From Table 1, one fails to see how the ‘net funds’ of US$5,101,438 were deployed to defray the various expenses.  It does not show this US$5 million was used to defray other non in rem expenses first leaving the balance of US$3,593,902 to cover the in rem expenses and specifically in respect of the bunker claim.  The same applies to the figures in Table 2.  In fact this is contrary to the finding of the Judge.  It is not helpful to describe the two sums as a mixed claim in the sense that they encompass both claims in  rem and claims in personam.  The reality is that the two sums are simply debts and from which one cannot tell whether they constitute in rem claims.

11.5     In The ‘Kommunar’ [1997] 1 Lloyd’s Rep 1 the plaintiffs claimed US$726,369.55 against the defendants.  The plaintiff’s claim was made up of items referred to in a whole series of invoices and were alleged to arise out of supplies by sub-agents or entities in South America to a number of named vessels said to be owned by the defendants.  The defendant raised jurisdictional challenge on the ground that the plaintiff’s claim did not fall within section 20(2)(m) of the Supreme Court Act 1981 (the equivalent of our section 12A(2)(l). Clarke J (as he then was) held at page 5 that :

‘ …… the mere fact that the claim is a claim on a general account does not by itself lead to the conclusion that the claim is not a claim in respect of goods or materials supplied to a ship, provided that the claim can properly be so regarded.’

11.6     Clarke J referred to the long line of authorities beginning from West Friesland, The (1859) Sw. 454 and Comtesse de Frègeville, The (1861) Lush. 329 which had been used to support the proposition that a claim on a general account was outside the Admiralty jurisdiction.  These cases were decided on statutes which related to necessaries.  Previously the Admiralty jurisdiction of the Court had been a jurisdiction in respect of the supply of necessaries.  Clarke J explained that these cases were decided on some other basis and these cases did not support such a general proposition.  In The ‘Kommunar’ the invoices showed that the underlying nature of the claim relates to the costs of supplying goods to the ship.

11.7     In The ‘Skulptor Konenkov’ (1999) 161 ALR 131, Tamberlin J of the Federal Court of Australia at page 137 referred to The ‘Kommunar’ and commented that :

‘ However, that case did not require his Honour to consider the offsetting of debits and credits in a context where there was an inter-mixture of in rem and in personam credits and debits.’

11.8     I have no difficulty with Clarke J’s view.  So long as the general account shows the claim is in respect of goods and materials supplied to a shop, the matter is within the Admiralty jurisdiction.  The real issue here is really whether Stellar Ocean’s claim is simply a debt and from which one cannot tell if it is in the nature of a claim in respect of goods or materials (i.e. bunker), supplied to the vessel.  In this case one cannot tell its nature because of the way the US$5.1 million had been used to deduct the expenses of US$8.6 million which included claims which are within section 12A(2)(l) and also outside of it leaving a balance of US$3.5 million.  In other words, the evidence did not show that the bunkers in rem claims had not already been discharged with the utilization of the US$5,101,438.  Hence Mr Coleman has to resort to the argument there was appropriation of the claim to the bunker costs which I disagree and will address later.  The same reasoning applies to the other claim of US$769,593. 

3)  Appropriation

12.1     The Judge held that there was no appropriation by Stellar Ocean of the two sums specifically to the bunker claims until it served the Further and Better Particulars.  The Judge then relied on The ‘Mecca’ [1897] AC 286 which states that the creditor has the right of appropriation and may exercise the right up to the last month, by action or otherwise and also a passage in Chitty on Contracts 31^st  Ed Vol 1, paragraph 21–062 which expressed the view that what is ‘the very last moment’ depends on the circumstances of each case and the creditor may declare it by bringing an action or in any other way that makes his meaning and intention plain.  The Judge held that Stellar Ocean’s intention to appropriate was made plain by the Further and Better Particulars.

12.2     The difficulty with this argument is that the Admiralty jurisdiction must exist at the time of the commencement of the action, namely, by the issuance of the writ.  In The ‘Mecca’ the appropriation was made by the arrest of the vessel (per Lord Macnaghten at pages 293 and 298).  This was at a time when the Admiralty actions in rem were commenced by the arrest of the vessel.  The view expressed in Chitty is not focused on an issue like the present case which is about the existence of the jurisdiction at the commencement of the action.  Hence the Judge had focused on a wrong point in time.

12.3     Mr Coleman does not dispute that the Court must have Admiralty jurisdiction at the time when the action commenced.  However, he argued that the appropriation of payments towards the non in rem claims occurred before the action was commenced.  He referred to the two demand letters and the breakdown of the two sums and he submits that the two sums comprised only in rem claims.  He argued that this is consistent with Stellar Ocean’s conduct in making demands which expressly reserved its right to exercise a maritime lien over the vessel.

12.4     He further argues that from Indorsement of Claim of the writ, it can be seen that Stellar Ocean had appropriated the funds it had on account prior to the issuance of the writ to pay off the non in rem claim.  The Statement of Claim could only have been an expansion of description within the claim indorsed in the writ and the causes of action there identified.  The particulars at paragraph 9 of the Statement of Claim also show that the appropriations had occurred prior to the issue of the writ, for if the appropriation had occurred after the action was commenced, the amount claimed in the Statement of Claim would be less (or different) to the amounts claimed in the various demand letters, whereas the amounts claimed are in fact the same.

13.     Mr Coleman argued that the Further and Better Particulars merely clarified which in rem claims had been set off by the appropriation.  He said the Judge accepted this when he approached the issue by finding that Further and Better Particulars were an explanation of the amounts: ‘Stellar Ocean has elected to appropriate the “Net Funds” on account to expenses other than bunker costs’ and the Judge did not find that Stellar Ocean appropriated only by way of the Further and Better Particulars. Mr Coleman argued that if the Judge did, that was not correct by reason of the matters he had argued.

14.     I am unable to accept this submission.  In my view the Judge had made plain by his discussion on Stellar Ocean being able to exercise its right of appropriation up to the last moment, that the appropriation was not already exercised at the commencement of the action but only afterwards by the service of the Further and Better Particulars.  I refer to my earlier discussions.  Further if there was appropriation of the bunker costs which covers the whole of the claim, there was no need (and no point) to plead in the Statement of Claim other claims in respect of section 12A(2)(m), (n) or (o) of the HCO.

Is Stellar Ocean entitled to bring the action?

15.     There is a separate point raised by Mr Sussex on whether the claim by Stellar Ocean, as an agent of a demise charterer to recover disbursements fall within section 12A(2)(l).  Mr Sussex says that he would reserve this point for argument if this matter goes further.  As such it is not necessary for me to deal with this point.

Conclusion

16.     Accordingly I will allow the appeal and set aside the judgment below.  I will set aside the writ and grant a declaration that this Court has no jurisdiction in rem over the vessel.

Costs

17.     There will be an order nisi that Asset Wonder is to have the costs of the appeal and below. 

Hon Barma JA :

18.     I agree with the Judgment of Cheung JA.