High Court · Decided 23 August 2011

The “Bunga Melati 5”

Feedback & support

[2011] SGHC 195Case no. Admiralty in Rem No 21 of 2010 (Registrar's Appeal No 252 of 2010)

What happened, in plain English

There is no plain-English summary of this judgment yet.

Ask about this judgment

Laws this judgment relies on

Civil Law Act 1909

Grounds of decision

Official text from eLitigation

Belinda Ang Saw Ean J:
Introduction
[1] This was an appeal by the plaintiff from the decision of the Assistant Registrar (“AR”) in Equatorial Marine Fuel Management Services Pte Ltd v The Owners of the Ship or Vessel “Bunga Melati 5” [2010] SGHC 193, granting the defendant’s application to strike out and/or set aside the plaintiff’s admiralty writ in rem and statement of claim pursuant to O 18 r 19 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (the “ROC”) or the court’s inherent jurisdiction, and/or for want of admiralty jurisdiction in rem under s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (the “HCAJA”).
[2] After hearing the parties, I dismissed the appeal and upheld the decision of the learned AR, ordering that the plaintiff’s action be struck out under O 18 r 19 of the ROC. However, as I did not agree with all the views expressed by him (particularly those which related to the invocation of admiralty jurisdiction in rem), which I believe raise matters of practical significance to the Admiralty Bar, and as the plaintiff has appealed against my judgment (vide Civil Appeal No 193 of 2010), I set out the grounds of my decision below.
[3] I should add that the defendant had, in Registrar’s Appeal (“RA”) No 256 of 2010, also cross-appealed against part of the learned AR’s decision. However, as I had already ruled in the defendant’s favour in the present action, RA No 256 of 2010 was adjourned pending the outcome of Civil Appeal No 193 of 2010.
[4] In these grounds, references to O 18 r 19 of the ROC should be understood as including a reference to the court’s inherent jurisdiction to strike out an action as being frivolous, vexatious or an abuse of process (on which see Singapore Civil Procedure 2007 (G P Selvam gen ed) (Sweet & Maxwell Asia, 2007) at para 18/19/16). As some cases cited in these grounds make reference to different editions of the HCAJA, I should also make clear that the abbreviation “HCAJA” should be understood as including all editions of the High Court (Admiralty Jurisdiction) Act, since they are substantially the same in terms of content. In addition, since I will be referring to ss 3(1) and 4(4) of the HCAJA frequently throughout these grounds, it is convenient to set out these provisions in extenso:
Overview
The plaintiff’s case
[5] The plaintiff, Equatorial Marine Fuel Management Services Pte Ltd, was a Singapore company in the business of supplying marine fuels (“bunkers”). The defendant, MISC Berhad, was a Malaysian shipping company and the registered owner of a number of vessels, including the Bunga Melati 5.
[6] In its statement of claim, the plaintiff alleged that the parties had, on or about 3 July 2008, entered into two fixed price contracts, under which it agreed to supply 35,000 metric tonnes of bunkers (per contract) to a number of vessels owned or operated by the defendant in August and September 2008 at the price of US$744 and US$750 per metric tonne respectively (the “Fixed Price Contracts”). In addition, the plaintiff alleged that the parties had, on or about 18 September 2008, entered into a separate contract for the supply of 1,000 metric tonnes of bunkers, on a “spot” basis, to the defendant’s vessel the MT Navig8 Faith (the “Navig8 Faith Contract”). According to the plaintiff, a Malaysian company, Market Asia Link Sdn Bhd (“MAL”), at all material times acted as the broker or buying agent of the defendant in respect of the Fixed Price Contracts and the Navig8 Faith Contract. I should say that the defendant contested these allegations with a different version of events, which I will come to at [45] below.
[7] The plaintiff did not receive full payment in respect of the supplied bunkers, and, according to the plaintiff’s statement of claim, a rather substantial sum of US$21,703,059.39 (plus contractual interest) remained outstanding.
[8] Consequently, the plaintiff commenced the present action in rem and served the writ in rem on the Bunga Melati 5; however, no warrant of arrest was issued and the vessel was not arrested. In all likelihood, security for the claim was furnished voluntarily in lieu of an arrest. It was common ground that the Bunga Melati 5 was not one of the vessels which had received the bunkers supplied. As such, this was what is commonly known as a “sister ship action” under s 4(4)(b)(ii) of the HCAJA.
[9] The plaintiff’s case was essentially that the defendant was a party to the Fixed Price Contracts and the Navig8 Faith Contract via the agency of the defendant’s alleged agent, MAL, and that the defendant was therefore contractually liable to the plaintiff for the bunkers supplied. As an alternative to its claim in contract, the plaintiff also argued that, if there were no valid and binding contracts for the sale and supply of the bunkers between the parties, the defendant was liable to it in unjust enrichment, since the defendant had enjoyed the use of the plaintiff’s bunkers without paying for them. In addition, the plaintiff contended that the offer of a corporate guarantee by the defendant, in the context of earlier court proceedings in the United States in respect of the same dispute (the “US proceedings”), amounted to an admission of liability by the defendant.
The US proceedings
[10] Prior to the start of the present action, the plaintiff had commenced another set of proceedings in the United States District Court for the Central District of California (the “California District Court”), based on essentially the same claims as the present action (albeit the issue of agency was apparently not pleaded). The plaintiff filed a “Verified Complaint” to obtain an attachment order under Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the “Rule B attachment order”). The Rule B attachment order was executed against one of the defendant’s vessels, the Bunga Kasturi Lima, at Long Beach, California.
[11] As alluded to above (at [9]), the offer of a corporate guarantee was made to the plaintiff by the defendant. It was made a day after the Rule B attachment order was executed against the Bunga Kasturi Lima and was to the effect that the defendant would pay to the plaintiff the sum of US$22.4 million, on condition that the plaintiff withdrew all suits against the defendant in the United States and not commence any further actions in rem against the defendant’s vessels. The plaintiff, however, did not accept this offer.
[12] The defendant filed a motion to vacate the Rule B attachment order and to dismiss the Verified Complaint for failure to state a claim. The California District Court vacated the Rule B attachment order, a decision which was upheld on appeal by the United States Court of Appeals for the Ninth Circuit (the “Ninth Circuit Court of Appeals”), though the motion to dismiss the Verified Complaint was not considered, and was scheduled for further hearing. However, the further hearing never took place, as the plaintiff voluntarily withdrew the Verified Complaint.
The defendant’s application
[13] As stated (see [1] above), before the learned AR, the defendant applied (vide Summons No 919 of 2010) for, inter alia, the following orders:
[14] The defendant’s primary submission in support of its application was a straightforward denial of any agency relationship between it and MAL, and therefore also a denial that it had directly contracted with the plaintiff for the supply of bunkers. The defendant asserted that at all material times, it had procured the sale and supply of bunkers for its vessels from MAL as its contractual sellers (with MAL in turn procuring bunkers from suppliers such as the plaintiff), and that there was therefore no contractual relationship between the defendant and the plaintiff. Consequently, the defendant submitted that the plaintiff’s claim should be struck out for being plainly unsustainable on the merits, and that, for the same reasons, the defendant was not “the person who would be liable on the claim in an action in personam” (the “relevant person”) under s 4(4)(b) of the HCAJA and the plaintiff had therefore wrongly invoked the admiralty jurisdiction in rem of the court. The defendant also argued that these submissions applied with equal force to the plaintiff’s claim in unjust enrichment. In addition, the defendant relied on the doctrine of issue estoppel, arguing that the US proceedings estopped the plaintiff from litigating the same issues before the Singapore court, and that the plaintiff’s action should therefore be struck out as being frivolous, vexatious or an abuse of process. Finally, the defendant submitted that the plaintiff’s action, following on the heels of the US proceedings, offended the “one claim, one ship” principle, and that the plaintiff was thereby prevented from invoking the admiralty jurisdiction in rem of the court or that the action should therefore be struck out.
The AR’s decision
[15] In a carefully considered decision, the learned AR granted the first two orders sought (ie, [13(a)] and [13(b)] above), but declined to grant the final order (which formed the subject matter of RA No 256 of 2010 and was not material to this appeal).
[16] In his grounds of decision, the learned AR held that, although the relevant provisions of the HCAJA did not impose a threshold test of merits which the plaintiff had to discharge before it could invoke the admiralty jurisdiction in rem of the High Court, in light of the Court of Appeal’s decision in The Vasiliy Golovnin [2008] 4 SLR(R) 994 (“The Vasiliy Golovnin (CA)”), the common law required a plaintiff to show a good arguable case on the merits before the court’s admiralty jurisdiction in rem could be invoked. He considered, however, that this view of the law did not sit easily with my decision in The Eagle Prestige [2010] 3 SLR 394, which he interpreted as holding that there was no requirement (whether under the HCAJA or at common law) for a plaintiff to go into the merits of the claim when the invocation of the court’s admiralty jurisdiction in rem was challenged by the defendant, unless there was also an application to strike out the action pursuant to O 18 r 19 of the ROC or the inherent jurisdiction of the court.
[17] Applying this view of the law to the facts, the learned AR held that, on the evidence, the plaintiff had failed to establish a good arguable case that there was a contractual relationship between it and the defendant (via the agency of MAL). On the basis of his reading of The Vasilily Golovnin (CA), the learned AR concluded that the admiralty jurisdiction in rem of the court had been improperly invoked as the plaintiff was unable to show that it had a good arguable case on the merits, and the writ was to be set aside. Alternatively, on the basis of The Eagle Prestige, the writ was to be struck out pursuant to O 18 r 19 of the ROC or pursuant to the inherent jurisdiction of the court because, on the same facts, the plaintiff’s claim was obviously unsustainable and bound to fail.
[18] The learned AR applied the same reasoning to the plaintiff’s claim in unjust enrichment, and held that the plaintiff had again failed to show a good arguable case on the merits, which meant that the writ was to be set aside due to a lack of admiralty jurisdiction in rem (as per his understanding of The Vasilily Golovnin (CA)), or alternatively that the claim was to be struck out pursuant to O 18 r 19 of the ROC or the court’s inherent jurisdiction as it was plainly unsustainable (as per The Eagle Prestige).
[19] In view of his conclusions above, the learned AR was not therefore obliged to consider the defendant’s other arguments based on issue estoppel and the “one ship, one claim” rule, but he nonetheless dealt with both submissions, concluding obiter that, in the circumstances, the plaintiff’s writ ought not to be set aside or struck out on those grounds.
RA 252 of 2010
[20] I should make it clear that, on appeal, a number of matters were either common ground or not in dispute, namely that:
Thus, the dispute centred on whether the defendant could be said to be the “person who would be liable on the claim in an action in personam” within the meaning of s 4(4)(b) of the HCAJA. The thrust of the plaintiff’s case was that the defendant could indeed be said to be such a person, while the defendant’s arguments were to the contrary. This simple summary of the respective positions, however, does not do justice to the complexity of the underlying issues as well as the extensive arguments canvassed by both parties before me.
[21] The plaintiff, for instance, made the following submissions:
[22] The defendant did not meet all the plaintiff’s submissions, as the defendant conceded at the outset of the hearing before me that the proper standard of proof to be applied under s 4(4)(b) of the HCAJA (see [21(a)] above) was indeed that of a “good arguable case”, as opposed to that of a “balance of probabilities”, as it had contended before the learned AR. However, the defendant’s other submissions were as follows:
In addition, the defendant introduced a new submission, viz, that the plaintiff had no locus standi to bring the present action because, pursuant to a notice of assignment in the tax invoices in respect of the bunker transactions which formed the subject of the plaintiff’s claims, it had assigned all proceeds thereunder to another entity, BNP Paribas (see [37] below).
Summary disposal of admiralty actions in rem
[23] As a preliminary matter, it is vitally important to appreciate that the defendant in the present action was challenging the plaintiff’s claim on two alternative bases: as a matter of jurisdiction, and also on the merits.
[24] As I suggested in The Eagle Prestige (at [21] and [54]), when a plaintiff invoked the admiralty jurisdiction in rem of the High Court by serving an admiralty writ in rem on the vessel, or by arresting the vessel, there were essentially two routes open to the defendant to dispose of the plaintiff’s action without troubling himself with a full trial:
I should add that the defendant may also apply to discharge the warrant of arrest on the basis of material non-disclosure by the plaintiff in the affidavit supporting the application for the warrant of arrest (The Rainbow Spring [2003] 3 SLR(R) 362 (“The Rainbow Spring (CA)”) at [35]), as it was well-established that this was entirely independent of applications under O 12 r 7 and O 18 r 19 of the ROC (see The Rainbow Spring (CA) at [37] and The Vasiliy Golovnin (CA) at [84]), but as discharging the warrant of arrest on the basis of material non-disclosure generally does not otherwise affect the validity of the plaintiff’s admiralty action (unlike applications under O 12 r 7 and O 18 r 19 of the ROC), and because the issue of non-disclosure was not relevant to this case, I will not discuss it further, and nothing in these grounds should be taken as being inconsistent with my views on the matter of non-disclosure in The Eagle Prestige.
[25] For the avoidance of doubt, I have in these grounds endeavoured (except where I have quoted verbatim from the source material) to use the term “set aside” (and its various cognates) to describe the relief sought by the defendant in challenging the court’s jurisdiction pursuant to O 12 r 7 of the ROC, and “strike out” (and its various cognates) to describe the relief sought by the defendant pursuant to O 18 r 19 of the ROC or pursuant to the court’s inherent jurisdiction.
[26] The reason for such punctiliousness is that it was sometimes unclear from the cases which route a defendant was adopting, and consequently what relief the court was granting. The learned AR, for instance, although clearly granting relief in the nature of O 12 r 7 of the ROC by upholding the defendant’s jurisdictional objections, expressed himself in terms of “striking out”, which was language that was more appropriate to O 18 r 19. Notwithstanding this, in these grounds, I have treated the learned AR as basing his decision on both O 12 r 7 and O 18 r 19. Precision is important, because the relationship between relief under O 12 r 7 and O 18 r 19 of the ROC, in the context of the HCAJA, is complex, and they have sometimes been confused due to lack of clarity in the terminology used.
[27] There have been cases where the defendant’s application was based solely on the ground of lack of admiralty jurisdiction in rem (eg, Schwarz & Co (Grain) Ltd v St Elefterio ex Arion (Owners) (The St Elefterio) [1957] 1 P 179 (“The St Elefterio”); The Wigwam [1981-1982] SLR(R) 689 (“The Wigwam (HC)”); The Owners of the Motor Vessel “Iran Amanat” v KMP Coastal Oil Pte Limited (1999) 196 CLR 130 (“Iran Amanat”)). There have also been cases where the application was based solely on O 18 r 19 of the ROC or the court’s inherent jurisdiction (eg, Sunly Petroleum Co Ltd v The Owners of the Ship or Vessel Lok Maheshwari [1996] SGHC 212 (“Lok Maheshwari”); The J Faster [2000] 1 HKC 652). More often than not, however, the application was effectively based on both grounds (albeit drafted as alternative prayers in the application), with the defendant canvassing the same arguments in its applications under O 12 r 7 and O 18 r 19 of the ROC (as in the present action), or arguing that the plaintiff’s claim, in addition to invalidly invoking jurisdiction under O 12 r 7, was bound to fail for some other reason under O 18 r 19 (eg, The Moschanthy [1971] 1 Lloyd’s Rep 37; The Hsing An [1971-1973] SLR(R) 843; and the present action, as far as issue estoppel was concerned).
[28] Strictly speaking, it should not be proper to deploy the same arguments in respect of O 12 r 7 and O 18 r 19 of the ROC, for when an action is struck out under the latter provision, that means the court is exercising its jurisdiction to prevent (broadly speaking) an abuse of its process; whereas if a writ is set aside under the former, that means the court has no jurisdiction (see Astro Exito Navegacion SA v W T Hsu (The “Messiniaki Tolmi”) [1984] 1 Lloyd’s Rep 266 and D C Jackson, Enforcement of Maritime Claims (LLP, 4 ed, 2005) at paras 9.60 and 10.67). In non-admiralty cases, for instance, where the court’s jurisdiction depends on valid service of the writ of summons on the defendant, an argument that the court is not properly seised of jurisdiction due to a defect in service would be mounted under O 12 r 7 of the ROC, and not O 18 r 19. Yet, in admiralty actions (as this case illustrated), an unhealthy practice appears to have built up whereby both reliefs are often claimed on the same arguments (viz, that the defendant could not be said to be the “relevant person” within the meaning of s 4(4)(b) of the HCAJA), so that facts forming the basis of jurisdiction and those forming the substance of the underlying claim become mixed up (see [30] below), leading to confusion between the existence of jurisdiction and its exercise.
[29] In The Eagle Prestige, I adverted (at [54]) to this undesirable state of affairs. The broad terminology I used there, viz, “Situation 1” and “Situation 2” cases, was intended, inter alia, to emphasise the distinction between a question of jurisdiction in rem under O 12 r 7 of the ROC and a question of merits under O 18 r 19. It was also a convenient way to explain that, typically, in the former case, the plaintiff in an action in rem is not required to disclose defences to the claim at the stage of applying for a warrant of arrest. Given its contextual purpose, that terminology would not have adequately captured the full breadth and complexity of the two approaches.
[30] Distinguishing between applications under O 12 r 7 and O 18 r 19 of the ROC in this manner raised the question of when the court should resort to O 12 r 7 of the ROC, and when to O 18 r 19, especially in instances where (as in the present case) it was faced with applications under both provisions, albeit framed in the alternative. The touchstone, in my opinion, was whether the court could limit its inquiry to purely jurisdictional matters of fact or law, in which case O 12 r 7 was the correct procedural tool; or whether it was required to delve into non-jurisdictional matters of fact or law (ie, the merits of the dispute), in which case O 18 r 19 was the correct means of proceeding.
[31] The distinction between issues of jurisdiction and issues of liability or merits was one that was generally well-established in admiralty law. Jurisdictional disputes, as I understood the term, were disputes over the existence or veracity of jurisdictional facts (ie, facts which had to be found as a condition precedent to jurisdiction), or disputes over the correct answer to a jurisdictional question of law (eg, the proper interpretation of a statutory provision which conferred jurisdiction). Jurisdictional disputes were necessarily separate from, and logically prior to, the substantive, non-jurisdictional dispute between the parties over the issue of the defendant’s liability (ie, the merits of the plaintiff’s claim), and as such, the court was obliged to resolve jurisdictional disputes at the outset, once and for all (I Congreso del Partido [1978] 1 QB 500 at 535–536 (see [105] below) and The Jarguh Sawit [1997] 3 SLR(R) 829 at [30] (see [90] below)), after which the matter was res judicata (The Jarguh Sawit at [32] and [39]), and the action (assuming the court was seised of jurisdiction) proceeded to a trial of the merits.
[32] The conclusive resolution of jurisdictional disputes in advance of the substantive trial of the merits was the proper province of O 12 r 7 of the ROC, from which it followed that non-jurisdictional matters (eg, the existence or veracity of non-jurisdictional facts, or the resolution of non-jurisdictional questions of law) relating to the merits of the dispute were not to be investigated by the court in an application to set aside the writ under O 12 r 7 (The Indriani [1996] 1 SLR(R) 5 at [17]), for at that stage the court was concerned exclusively with jurisdictional matters (whether of fact or of law). Order 12 r 7 of the ROC was not the proper means by which to deal with non-jurisdictional matters, because at the jurisdictional stage, the existence and veracity of non-jurisdictional facts pleaded by the plaintiff were to be assumed (David Chong Gek Sian, “In Personam Liability, Beneficial Ownership and the Action in Rem” (1994) 6 SAcLJ 272 (“Chong’s article”) at p 275, citing many of the authorities I will be dealing with later in these grounds), and non-jurisdictional questions of law ignored. In other words, non-jurisdictional questions of fact (or the application of the law to such facts), being matters which were appropriately concerned with liability or merits (ie, the strength of the plaintiff’s claim), were to be separately dealt with at the substantive trial, or, if the plaintiff’s claim was so unmeritorious as to be plainly unsustainable, under O 18 r 19 of the ROC.
My decision under O 18 r 19 of the ROC
[33] At the hearing of the appeal the parties were contesting a large number of non-jurisdictional matters of fact and law. Indeed, from the outset, the defendant’s General Manager, Corporate Procurement and Supply Management, Ms Noraini Binti Ibrahim, in her first affidavit claimed that the present proceedings were “frivolous, vexatious and an abuse of process”. I therefore considered that the application was to be dealt with under O 18 r 19 of the ROC. As I have already indicated (see [2] above), I upheld the decision of the learned AR and struck out the plaintiff’s action under O 18 r 19 of the ROC.
[34] In the first part of these grounds ([35]–[75] below), I explain my ruling, while in the second part of these grounds ([76]–[157] below), I explain my reasons for rejecting the learned AR’s primary basis for his decision under O 12 r 7 to “strike out” (ie, set aside (see [26] above)) the action, viz, that the plaintiff was required to satisfy the court that it had a good arguable case on the merits before it was entitled to invoke the court’s admiralty jurisdiction in rem.
Introduction
[35] As I said in The Eagle Prestige (at [57]), it is always open to a defendant to apply at an early stage of admiralty proceedings for the action to be struck out pursuant to O 18 r 19 of the ROC on the basis that it has no chance of success, and the burden on the issue of non-liability lies on the defendant to show that the plaintiff’s case is wholly and clearly unarguable.
[36] The question for the court, upon an application for a striking out of the action, would be the strength, sustainability or merits of the plaintiff’s claim, ie, all the non-jurisdictional matters which are not generally germane on a challenge to jurisdiction under O 12 r 7 of the ROC (see [32] above). Counsel for the defendant, Mr Prem Gurbani, advanced a number of submissions calculated to demonstrate that the plaintiff’s claim was plainly unsustainable on the merits.
The plaintiff’s locus standi
[37] Mr Gurbani took this as a threshold point at the appeal (see [22] above) even though it was not his strongest submission. He argued that the plaintiff lacked locus standi to bring the present action because the invoices (which were annexed to a letter of demand sent by the plaintiff’s previous solicitors) issued by the plaintiff in respect of the unpaid bunkers plainly stated that “[a]ll proceeds hereunder are assigned to BNP Paribas…”. Consequently, the defendant submitted, it was clear that the party entitled to those proceeds was BNP Paribas and not the plaintiff, and that the plaintiff therefore had no arguable case against the defendant, necessitating that the action be struck out as being obviously unsustainable. At the hearing, Mr Gurbani expanded on this submission, asserting that, as a result of the assignment, the action should have been brought by BNP Paribas, or BNP Paribas should at least have been joined as plaintiff.
[38] I did not accept this argument, because it was clear from the relevant documents that there was no absolute assignment of the plaintiff’s receivables to BNP Paribas; the notice in its tax invoices was merely confirmatory of a floating charge the plaintiff had granted to BNP Paribas over the sums standing to the credit of the plaintiff’s account with it. Notably, the statement comprising the notice directed all payment of proceeds of tax invoices into the account of the plaintiff with BNP Paribas, and not to BNP Paribas’ account – a strong sign that there was no assignment in place. It was therefore somewhat misleading for the invoices to have stated that the “proceeds” had been “assigned” to BNP Paribas, for the fact of the matter was that the security in question was a floating charge in favour of BNP Paribas over sums standing to the credit of the plaintiff’s account with it.
[39] As Mr Leong Kah Wah, counsel for the plaintiff, explained, at the material time, the plaintiff had in place trade facilities with BNP Paribas, which was governed by a “Letter Agreement” dated 29 July 2008. Clause 9(iii) of the Letter Agreement made reference to a “registered Fixed and Floating Charge in the name of [the plaintiff] dated 27 September 2002”. Clause 15(iii) of the Letter Agreement and cl 3.1 of the Fixed and Floating Charge, setting out the assets included within the charge, were drafted in wide terms, and would certainly have included the monies due to the plaintiff under the invoices, although the uncontroverted evidence from the plaintiff’s Managing Director, Mrs Choong-Ong Gek Hoon, was that, at all material times, there had been no default under the facilities and the floating charge had not crystallised. Mrs Choong-Ong further explained that the notice in the plaintiff’s invoices was inserted because of clause 12(xii) of the Letter Agreement, which provided that the plaintiff undertook to “notify the legal assignment of proceeds in the invoice to all its buyers”. In short, the statement in the invoices regarding the assignment of proceeds thereunder to BNP Paribas simply represented the plaintiff’s compliance with its contractual obligations to BNP Paribas, and nothing more.
[40] I did not think that the Letter Agreement’s reference to a “legal assignment” necessarily supported the defendant’s case, as Mr Gurbani had argued. In the circumstances, the terminology was not decisive. There was an important distinction between an outright assignment and an assignment by way of security, and whether a particular transaction was one or the other depended on the real intention of the parties (see Greg Tolhurst, The Assignment of Contractual Rights (Hart Publishing, 2006) at paras [3.15] and [3.16]), and if, on a true construction of the relevant documents, the real intention of the parties was that of a charge, the fact that it had been labelled an assignment was irrelevant (The Manchester, Sheffield and Lincolnshire Railway Company v The North Central Wagon Company (1888) 13 App Cas 554 at 568 (per Lord Macnaghten) and Helby v Matthews and others [1895] 1 AC 471 at 475 (per Lord Herschell LC)). Here, it was clear from the Letter Agreement and the Fixed and Floating Charge that what had been intended was a charge, and not an assignment as such. There were important differences between a charge and an assignment (see The Assignment of Contractual Rights at para [3.17], especially pp 51–52), not least the fact that the chargor would lack an intention to assign, a sine qua non of all consensual assignments (see The Assignment of Contractual Rights at paras [3.14] and [7.03]).
[41] Consequently, the locus standi point was without merit, and furnished no basis on which to strike out the plaintiff’s action.
The plaintiff’s claim in contract
[42] The plaintiff’s claim in contract was essentially that the defendant was a party to the Fixed Price Contracts and the Navig8 Faith Contract via the agency of its alleged agent, MAL, and that the defendant was therefore contractually liable to the plaintiff for the bunkers supplied.
[43] The main argument raised by the defendant in response was that there was no contractual relationship between itself and the plaintiff (see [14] above), because at all material times, MAL was the defendant’s contractual seller, issuing its invoices to the defendant based on the agreed unit price of the bunkers. It was common ground that the plaintiff’s invoices had never been sent to the defendant.
[44] The defendant’s argument sought to demonstrate that the evidence did not support the existence of the Fixed Price Contracts and the Navig8 Faith Contract as between the plaintiff and defendant, nor did they establish an agency relationship between the defendant and MAL. As such, Mr Gurbani submitted, the plaintiff’s claim in contract ought to be struck out under O 18 r 19 of the ROC.
Evidence of the Fixed Price Contracts and the Navig8 Faith Contract
[45] As stated (see [6] above), contrary to the plaintiff’s pleaded case that it (the plaintiff) was suing the defendant on two Fixed Price Contracts (ie, for the supply of 35,000 metric tonnes of bunkers in August 2008 for one month at the fixed price of US$744 per metric tonne, and 35,000 metric tonnes of bunkers in September 2008 for one month at the fixed price of US$750 per metric tonne), and the Navig8 Faith Contract, the defendant’s position was that it had entered into a six-month Bunker Fixed Price Agreement (“BFPA”), pursuant to which MAL supplied 138,000 metric tonnes of bunkers at a fixed price of US$475 per metric tonne, from 24 March 2008 to 23 September 2008, to a total of 13 vessels owned or operated by the defendant. According to the defendant, the BFPA was the subject-matter of a tender and MAL was amongst eight companies (including established firms such as Petronas Dagangan Berhad, BP Singapore Pte Ltd and Shell Malaysia Trading Sdn Bhd) that received bid documents. Six companies submitted bids to the defendant, and eventually MAL was successful in the tender, being awarded the BFPA on 14 March 2008. In addition to the BFPA, there were nine spot contracts (referred to by the defendant as the “Market Price Contracts”) for the supply of bunkers to vessels owned or operated by the defendant at the prevailing market rates for bunkers. Mr Gurbani argued that the plaintiff’s version of events (viz, that the plaintiff had contracted with the defendant, via the agency of MAL) was simply not credible in light of the clear evidence supporting the defendant’s position.
[46] I agreed with Mr Gurbani and was of the view that the plaintiff’s case was indeed fraught with insurmountable evidential difficulties.
[47] First, the plaintiff had pleaded that the two Fixed Price Contracts were evidenced by two e-mails from Compass Marine, both entitled “Bunker Confirmation” and dated 3 July 2008. The pleadings did not refer to MAL’s fax confirmations dated 4 July 2008, although both the e-mails from Compass Marine and MAL’s fax confirmations were referred to by Mr Darren-Middleton, Managing Director of Compass Marine, in an affidavit filed in support of the plaintiff’s case. The first e-mail from Compass Marine confirmed the supply of bunkers in the month of August 2008 at the fixed price of US$744 per metric tonne, while the second e-mail confirmed the supply of bunkers in the month of September 2008 at the fixed price of US$750 per metric tonne. Both these e-mails contained a clause stating “Sellers/Suppliers General Terms and conditions of sale to apply”. In its pleadings, the plaintiff referred to or relied on a number of clauses from these “terms and conditions”. In contrast, MAL’s fax confirmations of 4 July 2008 (confirming the supply of bunkers in August and September 2008 at the fixed price of US$744 per metric tonne and US$750 per metric tonne respectively) stated that the supply of bunkers was to be governed by “the general terms and conditions contained in “BIMCO STANDARD BUNKER CONTRACT”…” There was therefore a clear inconsistency in the terms and conditions under which the bunkers were to be supplied, which seemed to me to be a classic example of a “battle of forms” (see Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401). Thus, it might plausibly be suggested that there was no consensus ad idem, or at the very least, no Fixed Price Contracts on the plaintiff’s pleaded terms.
[48] Second, Mr Yahya bin Mohd Khalid, the Managing Director of MAL, had filed an affidavit in support of the plaintiff’s claim, but curiously and rather tellingly, Mr Yahya did not mention the Fixed Price Contracts and the Navig8 Faith Contract in his affidavit.
[49] Third, the plaintiff simply had no answer to the clear and cogent evidence from the defendant establishing the existence of the BFPA and the Market Price Contracts. Mr Gurbani submitted that the existence of the BFPA, and the due performance of their respective obligations thereunder by MAL and the defendant, completely undermined the plaintiff’s claim in contract, for it demonstrated beyond doubt that MAL was not the defendant’s agent. In this respect, Mr Gurbani pressed the point that it made no commercial sense for the defendant to obtain bunkers from MAL under the BFPA (in March 2008) at US$475 per metric tonne, and then “authorise” MAL (in July 2008) to contract, as the defendant’s agent, with the plaintiff or its brokers at a price in excess of US$740 per metric tonne. Like the learned AR (see [51] of his grounds of decision), I was persuaded by these facts and contentions. The plaintiff sought to cast doubt on the genuineness of the BFPA, contending that it was “puzzling” that the defendant awarded the BFPA to MAL, notwithstanding that MAL had offered the lowest bid, over more established companies such as BP Singapore Pte Ltd and Shell Malaysia Trading Sdn Bhd, especially since, based on the prevailing market prices at the time, by offering a bid of US$475 per metric tonne, the BFPA was a loss-making transaction for MAL from the outset. As the learned AR pointedly noted (at [53] of his grounds of decision), however, one would have thought that it was precisely because MAL offered such a low bid that it was awarded the BFPA over the other bidders.
[50] In the face of these evidential problems, the plaintiff contended that the issue of whether or not the defendant would be liable to the plaintiff on the claim in contract was a matter that should properly be dealt with at trial and could not be disposed of under O 18 r 19 of the ROC. The defendant, however, argued that, even aside from these difficulties, the plaintiff’s claim in contract was unarguable and bound to fail, because no agency relationship between the defendant and MAL was disclosed, and to this I now turn.
Agency by estoppel
[51] The plaintiff’s case was based on agency by estoppel (also known as ostensible authority), which required (Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another and another suit [2009] 4 SLR(R) 788 (upheld on appeal in Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another and another appeal [2011] 3 SLR 540 (“Skandinaviska (CA)”)) at [80]) that:
Mr Gurbani for the defendant submitted that none of these requirements had been satisfied, while Mr Leong for the plaintiff sought to persuade me that they had.
(1) Representation
[52] In relation to the first requirement, Mr Leong submitted that the requisite representation had been express and could also be implied from the defendant’s conduct.
(A) Express representation
[53] With regard to the submission that there had been express representation that MAL was the defendant’s agent, Mr Leong relied on a number of affidavits in support of this contention:
(a) Mr Middleton deposed in his affidavit that on or about 22 May 2006, an employee from the defendant’s Bunker Unit (whose name Mr Middleton could not recall) told him that MAL was the defendant’s bunker broker, and directed him to contact MAL to discuss the defendant’s bunker requirements. Mr Middleton did so and within three days Compass Marine and MAL successfully negotiated a bunker supply contract between the defendant and Compass Marine’s customer. As a result of other such transactions concluded between MAL and Compass Marine since then, Compass Marine formed the belief that MAL must have been “very close to”, and “acted exclusively for”, the defendant.
(b) Mr Yahya, in his affidavit dated 25 February 2010, confirmed that MAL had fixed bunker deals on behalf of the defendant, and that everyone in the bunker industry knew that MAL was acting “on behalf of” the defendant.
(c) Mr Lars Nielsen, the Managing Director of Brilliant Maritime Services (“BMS”), a firm of bunker traders and brokers, filed an affidavit deposing that, in or around September 2008, an employee in the defendant’s Bunker Unit named “Khairul” told one of his staff that MAL was the defendant’s bunker broker, and directed BMS to contact MAL to discuss the defendant’s bunker requirements. Like Mr Middleton, Mr Nielsen understood this to mean that the defendant had appointed MAL as the defendant’s broker or exclusive buying agent.
(d) Mr Grant Foulger, an employee of OceanConnect, filed an affidavit deposing that in or around November 2005, he was contacted by a representative of MAL, who advised him that MAL was acting as the defendant’s broker, and asked OceanConnect to submit a quote for the supply of bunkers to one of the defendant’s vessels. In respect of that transaction, OceanConnect and MAL shared a brokerage commission, and this arrangement continued up to December 2008, with OceanConnect and MAL sharing brokerage fees as co-brokers. It was not in dispute that OceanConnect and MAL shared a brokerage commission in respect of the supply of bunkers to the MT Navig8 Faith.
[54] There were several fundamental problems with the allegations in these affidavits. First, Mr Middleton’s affidavit was contradicted by an affidavit filed on behalf of the defendant by Mr Shahrol Azam Bin Shaharum, who was the defendant’s Manager of Bunker Operations and Management. In his affidavit, Mr Shaharum stated that no one in the defendant’s Bunker Section recalled having conversations of the sort alleged by Mr Middleton. There was some doubt, therefore, as to whether or not the alleged representations had been made at all. In this regard, it was noted (see [60] of the learned AR’s grounds of decision) that Compass Marine might have had a vested interest in asserting that MAL was the defendant’s agent, for, if the truth were otherwise, Compass Marine would potentially be liable to the plaintiff in negligence in having misrepresented that the plaintiff’s contractual buyer was the defendant when it was in fact MAL.
[55] Second, Mr Yahya’s affidavit was not at all persuasive, and I placed little weight on it. For instance, there was a glaring omission in his affidavit that MAL acted as agent for the defendant specifically in respect of the Fixed Price Contracts and the Navig8 Faith Contract, which omission was clearly deliberate because MAL had confirmed elsewhere that it was the defendant’s contractual seller. Firstly, in a previous Declaration, sworn on 5 December 2008 intended for the purposes of the US proceedings, Mr Yahya had clearly described the relationship between MAL and the defendant as that of contractual buyer and seller. Although the Declaration was not subsequently needed for the US Proceedings, the fact remained that Mr Yahya’s signed statement acknowledged the six-month contract between MAL and the defendant for the supply of 138,000 metric tonnes of bunkers to the defendant (ie, the BFPA). Secondly, in legal proceedings which MAL had instituted against Affin Bank Berhad (“Affin Bank”) (a Malaysian Bank) on 30 March 2009 in Malaysia for its failure to extend sufficient credit facilities to MAL (the “Malaysian proceedings”), the thrust of MAL’s case was that it had contracted with the defendant, that the plaintiff was one of MAL’s suppliers, and that it was on account of Affin Bank’s failure to extend sufficient credit facilities that MAL could not pay its suppliers. MAL pleaded its business model in its statement of claim, stating that with the promised credit facilities it would:
Furthermore, MAL pleaded that Affin Bank had also agreed but failed to provide MAL with fresh and/or enhanced facilities to bridge price differences due to price fluctuations when bunkers were bought by MAL at prices higher than the fixed price MAL had agreed to sell to the defendant. Consequently, MAL was not able to meet its payment obligations to its suppliers. In other words, the position that MAL had taken in the Malaysian proceedings was entirely inconsistent with what Mr Yahya was now insinuating in his affidavit, as well as with the plaintiff’s version of events (but, I might add, quite consistent with the defendant’s allegations).
[56] Thirdly, and in my view most importantly, Mr Yahya also did not explain a letter of 18 November 2008 from MAL to the defendant appealing to the latter to award MAL “a new fixed term supply contract” [emphasis added]. As the learned AR concluded, this was not a letter that would have been written by a party who took the view that it was only acting as an agent purchasing bunkers on behalf of its principal. Interestingly, MAL in this letter to the defendant actually referred to MAL having “secured a six (6) months supply of 138,000 MT… contract to [the defendant] at a fixed price USD475.00/MT at a total award price of USD 65,550,000.00 (“the Contract”)” [original emphasis]. Throughout the letter, MAL made repeated references to “the Contract”, and from what MAL was saying to the defendant, there was never any doubt of a purely contractual relationship between MAL and the defendant (ie, the defendant’s version of events) rather than an agency relationship (which was the plaintiff’s submission).
[57] Third, Mr Nielsen’s affidavit evidence was irrelevant because, at the hearing, Mr Leong conceded that he was not relying on Mr Nielsen’s affidavit, as it deposed to an incident which occurred after the Fixed Price Contracts and the Navig8 Faith Contract had allegedly been concluded. In any case, it was difficult to see how Mr Nielsen’s evidence could be regarded as a representation to the plaintiff that MAL had authority from the defendant to enter the Fixed Price Contracts and the Navig8 Faith Contract, when BMS was not involved at all in those transactions.
[58] Finally, none of the affidavits actually stated that there was a representation that MAL had authority to enter (on behalf of the defendant) into, specifically, the Fixed Price Contracts and the Navig8 Faith Contract, as opposed to some other transaction. It has already been noted that the alleged representation to Mr Nielsen took place in September 2008, after the Fixed Price Contracts had been concluded in July 2008 (see [57] above), but I should also point out that the alleged representations to Mr Middleton and Mr Foulger took place in 2006 and 2005 respectively, long before the Fixed Price Contracts and the Navig8 Faith Contract were allegedly concluded in July 2008 and September 2008. The plaintiff sought to meet this latter difficulty by submitting that the alleged representations, once made, were deemed to continue until retracted by the representor and the fact of retraction communicated to the representee. On this argument, the alleged representations in 2006 and 2005 therefore continued to remain operative in July and September 2008, because they had never been retracted by the defendant. Although Sean Wilken, Wilken and Villiers: The Law of Waiver, Variation and Estoppel (Oxford University Press, 2 Ed, 2002), para [9.57], was cited in support of this contention, the learned author of that work provided no authority for this broad proposition. The proposition was stated more narrowly (and, in my view, correctly) in K R Handley, Spencer Bower, Turner and Handley: Actionable Misrepresentation (Butterworths, 4 Ed, 2000) at para 61:
The case of Director of Public Prosecutions v Ray [1974] 1 AC 370 was cited as authority for this proposition, and it was clear from that decision that the House of Lords, when referring to “continuing representations”, meant only to refer to a representation made for the purpose of a particular transaction. It was impossible, therefore, to link the alleged representations in 2006 and 2005, which, even if made, would have related to completely different transactions, to the Fixed Price Contracts and Navig8 Faith Contract in 2008.
[59] In the face of all these difficulties, the plaintiff’s case in contract, insofar as it rested on ostensible authority based on an express representation, was bound to fail. It was therefore necessary to consider whether the necessary representation could be made out on the basis of an implied representation, in that the defendant knew or ought to have known that MAL had been representing itself to the bunker industry as the defendant’s agent, but took no steps to correct this view and/or acquiesced in MAL’s actions.
(B) Implied representation
[60] In support of its contention that the defendant knew or ought to have known that bunker suppliers and traders (such as the plaintiff) were under the impression that MAL was the defendant’s broker or agent, the plaintiff relied on a number of documents and allegations contained in various affidavits:
(a) It was alleged by Mr Yahya that MAL would not have been able to procure the supply of bunkers on such favourable credit terms if it was purchasing as contractual principal. However, that this allegation was contained in Mr Yahya’s affidavit, in my opinion, seriously weakened its evidential value (see [55] above).
(b) According to Messrs Middleton and Nielsen, MAL had no reputation in the bunker industry and was a “nobody” if not for the fact that it was or was believed to be the defendant’s bunker broker. In addition, according to Mr Yahya, about 90 to 95% of the defendant’s bunker requirements were met through MAL, so much so that Mr Leong submitted that the defendant was the only “customer” of MAL. These assertions, however, foundered upon Mr Foulger’s clear evidence that between February 2007 and December 2008, OceanConnect and MAL engaged in “more than 540 separate bunker transactions”, and that, since the inception of OceanConnect’s course of dealing with MAL (apparently in November 2005), “more than 120” bunker transactions involved the defendant. If so, then between February 2007 and December 2008 alone there were at least 420 transactions in which OceanConnect was prepared to deal with MAL when the defendant was not involved. It was hard to see how it could be said that MAL was a “nobody”, or that the defendant was its only customer, in light of the plaintiff’s own evidence.
(c) It was stated by Mrs Choong-Ong that when the plaintiff, pursuant to the Fixed Price Contracts and the Navig8 Faith Contract, supplied the bunkers in question to the defendant’s vessels, the plaintiff would liaise directly with the defendant’s local agents in Singapore, MISC (Singapore) Pte Ltd, to coordinate the bunkering operations, and that MAL was never involved in the bunkering operations. Mrs Choong-Ong considered this to be “consistent with [MAL’s] role as a broker (as opposed to a contractual seller)”. However, Mrs Choong-Ong’s assertions concerned operational rather than transactional matters, and since the Fixed Price Contracts and the Navig8 Faith Contract were to be performed in Singapore, it was not clear why the fact that the defendant’s Singapore-based agent and subsidiary (rather than the Malaysia-based MAL) was coordinating the bunkering operations necessarily had to raise any eyebrows.
(d) The plaintiff also relied on the fact that, on 5 November 2008, when the plaintiff first sent a written demand for payment, the defendant did not deny liability but simply forwarded the demand to MAL. This was true, but what had actually happened was that, in forwarding the e-mail to MAL, the defendant had also added the terse message “[please] check whether this is [your] supplier”, which was, as the learned AR held (at [75] of his grounds of decision):
This was reinforced by MAL’s equally brief reply to the defendant that “we [MAL] will check immediately”.
(e) The plaintiff also pointed to the defendant’s offer of a corporate guarantee on 2 December 2008, after the plaintiff had attached the defendant’s vessel the Bunga Kasturi Lima in California (see [11] above), as an admission of liability, contending that there was no reason why a large, publicly-listed company like the defendant would offer to pay if it was not in fact liable for the outstanding amounts. The problem for the plaintiff, however, was that, as the learned AR noted (at [72] of his grounds of decision), inherent in the very notion of a guarantee was the provision of security for another party’s liability, and that the wording of the corporate guarantee made it clear that it was to guarantee the outstanding sum due and owing to the plaintiff from MAL. In addition, the defendant explained that the corporate guarantee would have been much less costly for the defendant than the continued attachment of the Bunga Kasturi Lima, as the vessel was worth far more than the plaintiff’s claim.
It was therefore hard to understand how any of the above points could convincingly be seen as some sort of implied representation from the defendant’s conduct that MAL was the defendant’s agent.
(2) Representation by person with “actual” authority
[61] The plaintiff’s claim based on agency by estoppel was unsustainable also because there was no real evidence that any representation, even assuming one had been made, emanated from a person with “actual” authority. The alleged representation to Mr Foulger was made by MAL, and not the defendant’s authorised representative, and it was trite that an agent could not clothe himself with authority via his own representations (see Skandinaviska (CA) at [38]), while Mr Middleton could not remember the name of the defendant’s employee he allegedly spoke to, much less whether that employee was authorised to make the alleged representations. Above all, Mr Yahya did not identify anyone from the defendant who had made the alleged representation.
(3) Inducement
[62] Finally, the plaintiff relied on a number of matters dating from November and December 2008 (eg, the defendant’s reaction to the plaintiff’s demand and the defendant’s offer of a corporate guarantee (see [60(d)] and [60(e)] above)) to buttress its case of an alleged “industry-wide belief” that MAL was purchasing bunkers in the name of the defendant as the latter’s broker or agent. However, all these matters post-dated the conclusion and performance of the Fixed Price Contracts and the Navig8 Faith Contract, so it was impossible for them to be indicative of any sort of implied representation by conduct which was relied upon by the plaintiff or which induced it to enter the transactions in question.
Conclusion on the plaintiff’s claim in contract
[63] On the evidence before me, the plaintiff’s case that there was a contractual relationship between the plaintiff and the defendant (established through the agency of MAL) for the sale of the bunkers was therefore plainly unsustainable and ought not to be allowed to proceed to a full trial.
[64] Consequently, I struck out the plaintiff’s action (insofar as it was based on a claim or cause of action in contract) pursuant to O 18 r 19 of the ROC.
The plaintiff’s claim in unjust enrichment
[66] In addition, the defendant could also rely on the defence of change of position, in relation to which the learned AR concluded (see [81]–[86] of his grounds of decision) that the evidence clearly showed that the defendant had bona fide changed its position following its receipt of the bunkers. The defence of change of position was accepted by the Court of Appeal in Seagate Technology Pte Ltd and another v Goh Han Kim [1994] 3 SLR(R) 836 at [31] and confirmed in Management Corporation Strata Title Plan No 473 v De Beers Jewellery Pte Ltd [2002] 1 SLR(R) 418 at [35], and it required that:
The defendant had changed its position by expending the bunkers, and paying a substantial sum of money to MAL in full settlement of the defendant’s contractual obligation to MAL under the BFPA. All of this was done bona fide, and it would be inequitable to require the defendant to make restitution, for the defendant would otherwise be exposed to double liability: once to MAL and again to the plaintiff (see Yaku Shin (JB) Sdn Bhd v Panasonic AVC Networks Singapore Pte Ltd and another [2008] 4 SLR(R) 193 at [82]).
[67] Further, insofar as the principle that restitution would not be ordered if restitutio in integrum was not possible was distinct from the defence of change of position (see Goff and Jones at para 1-084), that too stood in the way of the plaintiff’s claim in unjust enrichment.
[68] Consequently, the plaintiff’s claim in unjust enrichment was doomed to suffer the same fate as its claim in contract, in that it had to be struck out pursuant to O 18 r 19 of the ROC as being completely unsustainable.
Issue estoppel
[69] The defendant submitted that the plaintiff’s claims in contract and unjust enrichment had been determined by the US proceedings, and that the plaintiff was therefore estopped from litigating the same issues before the Singapore courts, with the result that the plaintiff’s action had to be struck out pursuant to O 18 r 19 of the ROC as being frivolous, vexatious or an abuse of process.
[70] In order to establish issue estoppel, it was necessary that (see The Vasiliy Golovnin [2007] 4 SLR(R) 277 (“The Vasiliy Golovnin (HC)”) at [38]; D s V Silo-Und Verwaltungsgesellschaft mbH v Owners of The Sennar and 13 Other Ships [1985] 1 WLR 490 (“The Sennar (No 2)”) at 499 (per Lord Brandon of Oakbrook)):
As the parties accepted that all the other requirements (viz, (a), (c) and (d)) were satisfied, the dispute before me was focused on whether or not the US proceedings resulted in a judgment that was “final and conclusive on the merits”. In The Vasiliy Golovnin (HC), Tan Lee Meng J held (at [42]) that “[f]or a judgment to be conclusive and final, it must be one that cannot be reopened by the court that pronounced it”, and endorsed (at [40]) the following comment by Lord Brandon in The Sennar (No 2) (at 499):
[71] The defendant argued that the US proceedings had indeed resulted in a “final and conclusive” judgment “on the merits” because, in order to obtain a Rule B attachment order, a claimant would have to satisfy the court that it had a prima facie maritime claim against the defendant. Given that the California District Court had, after considering the evidence and arguments of both parties, held that the plaintiff had failed to establish such a prima facie case for breach of contract and unjust enrichment and vacated the Rule B attachment order (a decision which was upheld by the Ninth Circuit Court of Appeals (see [12] above)), the defendant submitted that those decisions were clearly judgments which were final and conclusive on the merits.
[72] I did not accept this submission for the simple reason that the US proceedings were only concerned with whether or not the Rule B attachment order was to be vacated, and it was open to the courts in the United States to reach a different view on the same issues at the subsequent stage of considering the actual motion to dismiss the Verified Complaint (albeit the motion was subsequently withdrawn (see [12] above)). This was clear from the judgment of District Judge Valerie Baker Fairbank in the California District Court:
[73] In its appellate brief before the Ninth Circuit Court of Appeals, the defendant itself had accepted that the decision of the California District Court was not final and conclusive on the merits:
[74] Consequently, in my view, the US proceedings did not result in a judgment which was final and conclusive on the merits, and as such were not capable of giving rise to an estoppel. I therefore upheld the learned AR’s refusal to strike out the plaintiff’s action under O 18 r 19 of the ROC on the basis of issue estoppel.
Conclusion on striking out
[75] For the foregoing reasons, I upheld the AR’s decision to strike out the plaintiff’s claim under O 18 r 19 of the ROC on the basis that the plaintiff’s action was plainly and obviously unsustainable.
My decision under O 12 r 7 of the ROC
[76] I now turn to the jurisdictional aspect of the defendant’s application, viz, a prayer that the action be set aside on the basis that the admiralty jurisdiction in rem of the court under the HCAJA had been improperly and/or invalidly invoked by the plaintiff (see [13(b)] above). Although the defendant did not specify which provision of the ROC it was relying on for this prayer, as a challenge to the court’s jurisdiction, clearly it would have had to have been based on O 12 r 7 of the ROC. As I have stated (see [15] above), the learned AR granted an order in terms of this prayer as well, albeit using somewhat ambiguous language, being that of “striking out” rather than “setting aside” (see my discussion at [23]–[32] above regarding the difference between the two).
[77] I did not agree with the learned AR’s decision to set aside the writ in rem under O 12 r 7 of the ROC, which was based on the notion that, following some of the Court of Appeal’s remarks in The Vasiliy Golovnin (CA), in order to invoke admiralty jurisdiction in rem, apart from satisfying the relevant provisions of the HCAJA, there was also an independent requirement that a plaintiff show an appropriately strong case on the merits, to the standard of a “good arguable case”, and that, as the plaintiff had failed to do so (for the very same reasons the learned AR struck out the plaintiff’s action under O 18 r 19 of the ROC), the admiralty jurisdiction in rem of the court was not properly invoked.
[78] I propose to structure this part of my grounds of decision as follows, by explaining:
Requirements for establishing jurisdiction under s 4(4) of the HCAJA
Introduction
[79] When a defendant challenges the admiralty jurisdiction in rem of the court pursuant to O 12 r 7 of the ROC, he is essentially arguing that the plaintiff’s claim does not fall within the relevant provisions of the HCAJA, which, for the purposes of this case, I regarded as being s 4(4) (although I may refer more generally to ss 3 and 4 of the HCAJA for illustration purposes). The heading “[m]ode of exercise of admiralty jurisdiction” appears in s 4 of the HCAJA, but this should not be taken to mean that s 4 is merely about the exercise of jurisdiction, for it is well-established that the section also relates to the existence of jurisdiction (see The Ocean Jade [1991] 1 SLR(R) 354 at [19] and [20]).
[80] In such a jurisdictional challenge by the defendant under O 12 r 7 of the ROC, the onus is on the plaintiff to establish jurisdiction (The Aventicum [1978] 1 Lloyd’s Rep 184 at 186; The Andres Bonifacio [1991] 1 SLR(R) 523 at [19] (appealed on a different point and upheld at [1993] 3 SLR(R) 71); The Temasek Eagle [1999] 2 SLR(R) 647 at [13] and [15]; Vostok Shipping Co Ltd v Confederation Ltd [2000] 1 NZLR 37 (“Vostok Shipping”) at [19]; The Catur Samudra [2010] 2 SLR 518 at [23]), and he does so by demonstrating that his claim falls within s 4(4).
[81] It is helpful to separate s 4(4) of the HCAJA into its constituent parts in order to ascertain what it requires of a plaintiff. Under s 4(4), the plaintiff must:
I will refer to these requirements as “step (1)” or “step (2)” etc of s 4(4) of the HCAJA.
[82] At this juncture, I should reiterate my view (see [30]–[32] above) that, when a court is adjudicating a jurisdictional dispute under O 12 r 7 of the ROC, it is generally only concerned with jurisdictional matters, ie, jurisdictional facts or jurisdictional questions of law. Non-jurisdictional facts or questions of law are matters going towards the merits of the dispute (ie, the strength of the plaintiff’s case, or, what amounts to the same thing, the defendant’s liability), which are usually dealt with at trial or under O 18 r 19 of the ROC, with one ostensible anomaly which I discuss below (at [117]–[138]).
Step (1) of s 4(4): jurisdictional facts to be proved on a balance of probabilities, and jurisdictional questions of law to be shown on a good arguable case
[83] As a matter of principle, in the absence of statutory language dictating otherwise, jurisdictional facts have to be proved by the plaintiff on the normal civil standard of proof, ie, on a balance of probabilities, and this was supported by a great deal of authority where steps (2), (4) and (5) of s 4(4) of the HCAJA were concerned, which I will come to in due course (see [99]–[107] below). Insofar as step (1) of s 4(4) required jurisdictional facts to be established, the full bench of the High Court of Australia made it plain that the standard of proof was that of a balance of probabilities (see The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404 (“Shin Kobe Maru”)), as did the New Zealand Court of Appeal (see Baltic Shipping Co Ltd v Pegasus Lines SA [1996] 3 NZLR 641 (“Baltic Shipping”) and Vostok Shipping). I should add that the relevant provisions of the Admiralty Act 1988 (Act No 34 of 1988) (Cth) (the “Admiralty Act 1988”) and Admiralty Act 1973 (Public Act 1973 No 119) (NZ), which were the subject of consideration in those cases, were in all material respects identical to the corresponding provisions of the HCAJA.
[84] The learned AR appeared to suggest (at [19] of his grounds of decision), however, that under s 3(1) of the HCAJA (which necessarily includes step (1) of s 4(4)), a plaintiff only had to show jurisdictional facts to the standard of a good arguable case. The learned AR drew an analogy with O 11 r 1 of the ROC, where it was well-established that the standard of proof to be discharged by a plaintiff, when proving his version of the facts, was that of a “good arguable case” (Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438 (“Seaconsar”); Bradley Lomas Electrolok Ltd and another v Colt Ventilation East Asia Pte Ltd and others [1999] 3 SLR(R) 1156).
[85] However, I was of the view that the analogy was unsafe, because, as Robert Goff J (later Lord Goff of Chieveley) pointed out in I Congreso del Partido (at 536), the standard of proof required under Ord 11 of the Rules of the Supreme Court (SI 1965/1776) (“RSC”) (the equivalent of O 11 of the ROC) was expressly provided for in RSC, Ord 11, r 4(2) (see also O 11 r 2(2) of the ROC), ie, it had to be “made sufficiently to appear to the Court that the case is a proper one for service out of [jurisdiction] under this Order” [emphasis added]. Indeed, that was the very basis on which the House of Lords in Vitkovice Horni a Hutni Tezirstvo v Korner [1951] 1 AC 869 (“Vitkovice”) decided that a plaintiff was not required to satisfy the court on the normal civil standard of proof of jurisdictional facts (ie, on a balance of probabilities) under RSC, Ord 11, r 1(1) (per Lord Simonds at 879, Lord Radcliffe at 883 and Lord Tucker at 890), a decision which was confirmed in Seaconsar (where the House of Lords finally settled on the phrase “good arguable case” as expressive of the requisite standard) by none other than Lord Goff (at 453).
[86] Step (1) of s 4(4) of the HCAJA contained no language similar to that of O 11 r 2(2), and in the absence of such language, there seemed to me no good reason not to hold a plaintiff to the normal civil standard of proof as far as proving jurisdictional facts was concerned. Incidentally, in Empire Shipping Co Inc v Owners of the Ship “Shin Kobe Maru” [1991] 104 ALR 489, Gummow J, like the learned AR in this case, drew an analogy with the cases on service out of jurisdiction (such as Vitkovice) in deciding (at 493–494), on a defendant’s challenge to the court’s jurisdiction in rem under s 4(2) of the Admiralty Act 1988 (the Australian equivalent of s 3(1) of the HCAJA), that the plaintiff was only required to show a “strong argument” that the court had jurisdiction, but it was in my view significant that Gummow J’s approach was ultimately not endorsed by the High Court of Australia in Shin Kobe Maru; instead, the High Court affirmed that, for the purposes of s 4(2) of the Admiralty Act 1988 (corresponding to s 3(1) of the HCAJA and therefore step (1) of s 4(4)), jurisdictional facts had to be proved on a balance of probabilities. As a practical matter, it could of course be said (as it was by the learned AR in his grounds of decision) that at such a preliminary stage of the action, in the absence of discovery and cross-examination of witnesses, it would be inappropriate to insist on a standard of proof normally applicable to full trials. However, that was not a principled way of dealing with the point that when the court’s entire jurisdiction to adjudicate the action rested upon a disputed question of (jurisdictional) fact, that question of fact had to be resolved once and for all, using a standard of proof that was consistent with that used for proof of facts in general (in the absence of statutory language stating otherwise). Further, such pragmatic objections have not convinced courts in admiralty cases to abandon the standard of a balance of probabilities where proving jurisdictional facts was concerned (I Congreso del Partido at 535–536; The Aventicum at 186 and 190; and Vostok Shipping at [21]).
[87] However, where the jurisdictional dispute concerned a jurisdictional question of law, it was inapposite to speak of a “balance of probabilities”, since questions of law cannot be “proved” in any meaningful sense. Therefore, where the relevant limb of s 3(1) of the HCAJA (in step (1) of s 4(4)) does not require jurisdictional facts to be established, but only requires the plaintiff to demonstrate that his claim is of a particular legal character, then this is a pure question of law which cannot be proved on a balance of probabilities, but only has to be shown to the standard of a “good arguable case”.

The judgment continues past this page. Read the rest at eLitigation.

The “Bunga Melati 5”

Laws this judgment relies on

Grounds of decision

Introduction

Overview

The plaintiff’s case

The US proceedings

The defendant’s application

The AR’s decision

RA 252 of 2010

Summary disposal of admiralty actions in rem

My decision under O 18 r 19 of the ROC

Introduction

The plaintiff’s locus standi

The plaintiff’s claim in contract

Evidence of the Fixed Price Contracts and the Navig8 Faith Contract

Agency by estoppel

(1) Representation

(A) Express representation

(B) Implied representation

(2) Representation by person with “actual” authority

(3) Inducement

Conclusion on the plaintiff’s claim in contract

The plaintiff’s claim in unjust enrichment

Issue estoppel

Conclusion on striking out

My decision under O 12 r 7 of the ROC

Requirements for establishing jurisdiction under s 4(4) of the HCAJA

Introduction