The "Acrux"

Belinda Ang Saw Ean J:

[1] This appeal was brought by the defendant, as owner of the Acrux, to set aside the in rem writ on the ground that the plaintiff’s claim had been paid, so much so that there was no basis for the arrest of the Acrux in the first place. It was also contended on behalf of the defendant that on the ex parte application for the arrest of the Acrux, there had not been full disclosure of all material facts. There was the usual prayer for the plaintiff to pay damages for wrongful arrest. At the conclusion of the hearing, I upheld the decision of the Senior Assistant Registrar, Ms Thian Yee Sze, and dismissed the defendant’s appeal. I now publish my reasons.

[2] On 2 April 2004, the plaintiff, Schaar & Niemeyer (Far East) Pte Ltd, commenced in rem proceedings against the Acrux whose registered owner at all relevant times was Acrux Shipping Ltd, a Maltese company. The plaintiff’s claim arose from the alleged failure of the defendant to pay for goods and materials supplied to the Acrux.

[3] It was not seriously disputed that the plaintiff’s claim in this action was within s 3(1)(l) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed). I was persuaded that the plaintiff had satisfied the standard of proof required in an application to set aside an arrest of a vessel. That is to say, there was an arguable case that the defendant was the party liable in an in personam action. The plaintiff was not required to show that it was likely to win: see The St Elefterio [1957] P 179; The Rainbow Spring [2003] 3 SLR 362. I shall elaborate on the reasons for my decision.

[4] It is important to bear in mind the dates of some of the documents and events because it may possibly explain the furore over the arrested vessel. It is convenient to mention that the plaintiff’s claims were outstanding for about two years and the defendant did not settle the debt by the end of March 2004 as agreed to between the vessel’s manager, Accord Ship Management (Pvt) Ltd, and the plaintiff. At about the same time, the plaintiff learnt of the sale of the Acrux and her delivery to the new owner was scheduled for the period between 6 and 9 April 2004. The prevailing concern, after the defendant failed to make payment, was to ensure early recovery of the indebtedness before the plaintiff’s in rem rights became prejudiced. Mr Rene Heim, the managing director of the plaintiff, wrote on 31 March 2004 to Mr Mauro Balzarini, who is the beneficial owner of Galaxy Group Holding, the 100% shareholder of Acrux Shipping Ltd, informing him that if a bank guarantee in the sum of $51,064.06 was not provided by 1 April 2004 or payment was not received by 9.00am (Singapore time) on 2 April 2004, he would instruct a lawyer to arrest the Acrux. In the same fax, Mr Heim informed Mr Balzarini that the guarantee from Siba Ships Spa, a related company, was unacceptable. A guarantee from Siba Ships Spa was viewed as “practically worthless”. Another guarantee from Siba Ships Spa, this time to pay $51,064.06 out of the deposit the defendant expected to receive following the sale of the Acrux, was also rejected. The defendant, however, took a different view on this, arguing that the plaintiff should not have arrested the vessel, as security for its claim had been furnished by way of the second guarantee from Siba Ships Spa. I prefer the plaintiff’s view, as it is consistent with the defendant’s subsequent instructions to its bank to remit $51,064.06 to the plaintiff. Besides, the affidavit evidence of Claus Trenner of M/s Thümmel, Schütz & Partners, the plaintiff’s German lawyers, corroborated Mr Heim’s account of the events.

[5] Counsel for the defendant, Mr Augustine Liew, pinned the defendant’s opposition on the primary issue of whether or not there was an existing cause of action as at the date of commencement of these proceedings. He argued that the plaintiff’s claim was paid in the sense that the defendant had on 2 April 2004 given instructions to its bankers to remit payment to the plaintiff and that was understood by all concerned to suffice as timely payment. Counsel’s argument is unsustainable on the evidence. The plaintiff was expecting payment into its bank account and there was no payment on 2 April 2004 by 9.00am. I was satisfied on the evidence that there was no agreement that the plaintiff had changed its earlier position and agreed to wait until 6 April 2004 for payment. The alleged remittance advice produced by the defendant showed 6 April 2004 as the value date. Counsel was unable to point to any evidence to show that there was consensus ad idem to accept payment on 6 April 2004. In stipulating the value date as 6 April 2004 on the remittance advice, the plaintiff did not obtain an immediate and unconditional right to use of the money until the value date: see The Chikuma [1981] 1 Lloyd’s Rep 371. Separately, it is convenient to mention that the text of the remittance advice relied on by the defendant was in Italian. It was sent to the plaintiff without an English translation and the document itself bore no identification mark of the remitting bank. The deficiencies left the plaintiff in doubt as to its genuineness. Above all, the remittance advice showed the value date to be 6 April 2004. Accordingly, I was of the view that the plaintiff was justified in issuing the writ on 2 April 2004.

[6] The in rem writ was served on 5 April 2004. The defendant asked for the service to be set aside, but gave no reasons for its challenge to service. Accordingly, this complaint must fail.

[13] In paying the shortfall and interest in the total sum of $4,390.01, the defendant took the precaution, which I think was open to it, for the preservation of any right it might have against the plaintiff, by causing the payments to be made under protest. A party may challenge the admiralty jurisdiction and at the same time make payment of the claim under protest. This was the course adopted. At the same time as making payment under protest, the defendant separately filed on 8 April 2004 its application to set aside the arrest.

[15] Counsel for the defendant had a further and separate ground on which he invited the court to set aside the warrant of arrest. This was that on an ex parte application for the arrest of the Acrux, there had not been full disclosure to the court of the material facts. The importance of full and frank disclosure being made on an ex parte application was endorsed by the Court of Appeal in The Rainbow Spring ([3] supra). It was argued that the shortfall was not explained, the remittance advice was not exhibited to the affidavit leading the warrant of arrest and the guarantee from Siba Ships was not disclosed. In the light of the conclusions reached, there is no failure to make full and frank disclosure in the plaintiff’s affidavit affirmed in support of the ex parte application to arrest Acrux.