High Court · Decided 23 March 2010

The “Eagle Prestige”

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[2010] SGHC 93Case no. Admiralty in Rem No 233 of 2008 (Registrar's Appeal No 178 of 2009)

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Belinda Ang Saw Ean J:
Background facts and circumstances leading to the arrest of the Eagle Prestige
[2] By way of summary, the proceedings herein arose out of the grounding of the TS Bangkok in Tanjong Priok, Indonesia, on 10 November 2007 which resulted in hull and propeller damage to the vessel. At all material times, the plaintiff was the disponent owner of the TS Bangkok. By a time charterparty dated 22 May 2007 (“the May sub-charter”), the plaintiff sub-chartered the TS Bangkok to the defendant, EP Carriers Pte Ltd (“EP Carriers”).
[4] It is the plaintiff’s case that in breach of the May sub-charter, EP Carriers had directed the TS Bangkok to berth at Tanjong Priok, an unsafe port/berth. The principal claim was put forward on the basis that the defendant’s orders to berth the TS Bangkok at Tanjong Priok amounted to breach of the charterparty terms because it was an unsafe port/berth; alternatively, the loss was sustained as a consequence of complying with the orders of EP Carriers as charterer of the TS Bangkok. In correspondence, the plaintiff also claimed the sum of US$42,753.94 being outstanding charges and expenses due under the May sub-charter. Before me, however, the arguments centred on the principal claim which, according to the endorsement of claim, was for damages and/or an indemnity for breach of contract and/or duties contained in or evidenced by the May sub-charter.
[5] The Eagle Prestige was first arrested in Singapore waters on 8 January 2009 by the master and crew in Admiralty in Rem No 9 of 2009 for unpaid wages (“Adm 9”). On 17 February 2009, the master and crew applied for the vessel to be sold pendente lite. Eventually, the claim in Adm 9 was amicably resolved and the Eagle Prestige was released from arrest on 27 February 2009. Adm 9 was discontinued on 3 March 2009. On the same day of her release, the plaintiff arrested the Eagle Prestige in Adm 233 for breach of the May sub-charter in respect of the vessel TS Bangkok.
[6] Fortunately for the plaintiff, the writ in rem in Adm 233 was issued on 2 December 2008 before the vessel’s ownership changed on 22 December 2008. At the time of the plaintiff’s arrest, not only had the ownership of the Eagle Prestige changed, by 17 February 2009, EP Carriers was in provisional liquidation by way of a creditors’ voluntary winding up, and provisional liquidators were also appointed. It appears that the creditors approved the liquidation of EP Carriers on 6 March 2009.
[7] The circumstances leading to the plaintiff’s arrest of the Eagle Prestige were recounted in the two affidavits of Li Kang-Lin (“Li”), both filed on behalf of the plaintiff on 27 February 2009. I begin at the point when the plaintiff received notice of the grounding claim from the head owner’s P&I Club, The Swedish Club. In formally denying liability under the head charter of the TS Bangkok between the head owner and the plaintiff, the UK P&I Club (on behalf of the plaintiff), in its fax of 6 October 2008 requested, inter alia, details of the damage and the subsequent repairs. In addition, the UK P& I Club referred to a possible defence to the damage claim. The last paragraph of the fax read as follows:
[8] It was common ground that the head charter and May sub-charter were back to back, and there was a comparable provision in the May sub-charter. Capital Gate Holdings Pte Ltd (“Capital Gate”) who intervened in the proceedings alleged that cl 90 was a complete defence to the plaintiff’s claim, and as such was a material fact that should have been (but was not) disclosed in the affidavits leading the warrant of arrest (see [98]–[111] below).
[9] On 6 November 2008, The Swedish Club, on behalf of the head owner, replied rejecting the alleged defence with the counter argument that “the damage caused by the ship’s grounding [was] a peril that [was] covered under the prevailing c/p.” The Swedish Club also stated that the head owner had already notified EP Carriers of the repairs made to TS Bangkok, and that surveyors on behalf of EP Carriers had duly attended the surveys carried out in connection with the repairs. In short, the grounding damage was notified to the defendant and its liability insurers. On 10 November 2008, the plaintiff passed on the head owner’s claim of US$ 481,572.19 to the defendant. In particular, the UK P&I Club on behalf of the plaintiff wrote as follows:
[10] EP Carriers had presumably notified the claim to its insurers because some 18 days later, QBE Marine Underwriting Agency Pte Ltd (“QBE”), a subsidiary of QBE Insurance (International) Limited, responded in an email to the plaintiff’s Hong Kong lawyers, DLA Piper (“DLA”). The email of 28 November 2008 stated:
[11] Since security was not forthcoming, the plaintiff went ahead to file the writ in rem against the Eagle Prestige on 2 December 2008. The picture that emerged was a pattern of unfulfilled assurances from the defendant’s insurers, QBE, over the security issue. DLA sent reminders to QBE on 4 December 2008, and again on 8 December 2008. On 11 December 2008, QBE replied to DLA stating that they were still in discussions with EP Carriers on this claim and asked that they be given time till the next day at which time they said that DLA would receive a substantive response on the security demanded from their lawyers in Singapore. However, no positive response on security as promised materialised.
[12] In the meantime, unbeknown to the plaintiff, EP Carriers had, on 22 December 2008, sold the Eagle Prestige to the intervener “in consideration of the sum of one dollar (US$1.00) … and other good and valuable consideration …”. The shipping manager of Capital Gate, Tan Siew Ling (“TSL”) was the deponent of all the affidavits filed on behalf of the intervener. It is apposite to note that the only reason why TSL said she was in a position to testify on matters involving the defendant was because she was a director of EP Carriers from March 2001 to March 2009, and I noted from the documents that the bank facilities provided by United Overseas Bank (“UOB”) continued to be guaranteed by TSL and two others. The bill of sale of the Eagle Prestige was co-signed by TSL in her capacity as director of EP Carriers.
[13] TSL had deposed in her 4 affidavit that the defendant’s liability to UOB in the region of US$10.335m and S$1.61m was assumed by Linford Pte Ltd following an Assignment and Novation Agreement dated 24 December 2008 (“Novation Agreement”). Furthermore, ownership of the Eagle Prestige was transferred to Capital Gate as nominee of Linford Pte Ltd. The Novation Agreement was executed by TSL on behalf of EP Carriers. Tan Eng Joo, a director of EP Carriers signed the Novation Agreement on behalf of Linford Pte Ltd in his capacity as director of the company. Tan Eng Joo is also the sole shareholder of Linford Pte Ltd, a company newly incorporated in Singapore on 11 November 2008. It was a term of the Novation Agreement that Linford Pte would provide security in favour of UOB. Linford Pte Ltd agreed to give security by way of a legal mortgage on Eagle Prestige. Linford Pte Ltd was to procure its nominee, Capital Gate, to execute a first priority statutory mortgage over the Eagle Prestige. As TSL acknowledged in her affidavit, the value of the vessel was S$1.8m (and not US$8.2m as stated in the UOB facility letter dated 19 December 2008), and it was not surprising to find UOB requiring additional security to cover the indebtedness, namely a fresh legal mortgage on the same office property belonging to Eagle Stevedoring (Pte) Ltd and the same residential property of Tan Kheng Chong and Lim Guat. Furthermore, the same three directors of EP Carriers, Tan Kheng Chong, Tan Eng Joo and TSL were to execute in favour of UOB fresh joint and several guarantees for S$1.61m and US$10.335m respectively. For completeness, the Novation Agreement also involved the mortgage on another vessel, the Eagle Pride. I need only mention two events of default under the UOB facility that are relevant. The first event of default is that the Eagle Prestige is not to remain under arrest for more than three days. The other event of default is the failure to pay the wages of the master and crew of the Eagle Prestige by 31 December 2008. The master and crew arrested the Eagle Prestige in Adm 9 on 8 January 2009 and she was not released until 27 February 2009.
[14] Reverting to the narration of the procedural history, the first arrest of the Eagle Prestige was on 8 January 2009. On learning about the first arrest in Adm 9, the plaintiff filed a caveat against release on the same day. As stated earlier, Capital Gate entered an appearance in Adm 9. On 15 January 2009, AsiaLegal LLC (“AsiaLegal”) on behalf of Capital Gate wrote to Allen & Gledhill LLC (“A&G”) as solicitors for the plaintiff to demand that the caveat be withdrawn on the basis that the intervener owed no liability to the plaintiff. In response, A&G pointed out that the plaintiff’s writ in rem was issued before the change of ownership, and as such its claim was unaffected by the ownership change. At that point, AsiaLegal requested details of the plaintiff’s security requirements on 21 January 2009. Meanwhile, on 16 January 2009, DLA wrote to EP Carriers repeating the request for security in respect of the plaintiff’s claim. This time, the request was totally ignored. It later transpired that EP Carriers being insolvent and unable to carry on business had gone into provisional liquidation on 17 February 2009, and provisional liquidators appointed. Upon the vessel’s release from the first arrest on 27 February 2009, she was arrested by the plaintiff in Adm 233.
[15] On 9 March 2009, EP Carriers (through the liquidators) entered an appearance in Adm 233 as owner of Eagle Prestige at the time the writ was issued. One month later, Capital Gate intervened in Adm 233 and entered an appearance on 16 April 2009 as the new owner of the vessel. I noted that Capital Gate as early as 15 January 2009 had entered an appearance in Adm 9 as owner of the vessel.
Summons No 1777 of 2009 to set aside the warrant of arrest and outcome
[16] In Summons No 1777 of 2009 (“Summons 1777”), the intervener, Capital Gate, applied for the setting aside of the warrant of arrest (and not the writ in rem) and damages for wrongful arrest. The grounds of the application were set out in TSL’s 2 affidavit filed on 16 April 2009, and they were entirely based on the plaintiff’s failure to make full and frank disclosure of material information in the affidavits leading the warrant of arrest. In particular, cl 90 of the May sub-contract would absolve the defendant from all and any liability arising from the alleged grounding incident, and cl 90 should have been disclosed in the affidavit leading the warrant of arrest. TSL also alleged that the plaintiff had failed to disclose in the affidavits leading the warrant of arrest that the plaintiff was disputing the claim against the head owner and had raised the very same clause and cl 102 in the head charter in defence against the head owner’s damage claim.
[17] Clauses 90 and 102 of the May sub-charter read as follows:
[18] TSL’s 3 affidavit filed on 5 May 2009 introduced other areas of non-disclosure. They were:
(a) There was no information on the status of the head owner’s claim against the plaintiff, and since the head owner’s claim against plaintiff had not been determined the claim against the defendant was premature.
(b) EP Carriers had liability cover with QBE and the plaintiff was aware of that cover.
[19] In the midst of the additional areas of non-disclosures raised in the affidavits was the incongruous argument that there was a need for the plaintiff to demonstrate a “good arguable case” against the defendant. The latter argument was raised in TSL’s 3 affidavit filed on 5 May 2009 wherein she made the cursory allegation that there was no good arguable case because there was no evidence or contemporaneous correspondence that the grounding occurred. It is unclear what else was said before the AR hearing Summons 1777 who had noted down in his minute sheet the contention of Mr Timothy Tan, counsel for the intervener, that first, The Vasiliy Golovnin [2008] 4 SLR(R) 994 (“The Vasiliy Golovnin (CA)”) required the plaintiff to show a good arguable case and that second, this onus was not discharged by the plaintiff. The main objection was still material non-disclosure.
[20] The AR agreed with the intervener and ordered that the warrant of arrest be set aside for material non-disclosure. The AR explained that:
[21] Notably, Capital Gate chose to confine its objection to material non-disclosure. TSL’s affidavits did not rely on jurisdictional grounds to set aside the warrant of arrest. Equally, there was no separate application in Summons 1777 to strike out the writ in rem and action under O 18 r 19 of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“ROC”). At the risk of stating the obvious, if a claim is made without foundation, the defendant can always challenge jurisdiction under O 12 r 7 of the ROC as well as strike out the writ in rem and action under O 18 r 19.
Application to adduce further affidavit evidence after first hearing
[22] At the hearing of RA 178, the plaintiff applied for leave to adduce further evidence by way of an affidavit from Henry Ng (“Mr Ng”), a Senior Associate in A&G who attended before Assistant Registrar, Mr Adrian Loo (“AR Loo”), for the issuance of the warrant of arrest. Counsel for the plaintiff, Ms Vivian Ang, explained that the purpose of filing Mr Ng’s affidavit was to set out the various matters that were orally conveyed to AR Loo. According to Mr Ng, he attended before AR Loo for more than an hour but the certified true copy of AR Loo’s minute sheet recorded the following limited matters:
[23] I granted leave to the plaintiff to file Mr Ng’s affidavit. At the hearing of RA 178, Mr Tan argued that Mr Ng’s affidavit was plainly an afterthought and the court should not give it weight. Although Mr Tan objected to the lateness of the application and doubted its veracity and credibility, the intervener did not appeal against my decision granting leave to adduce further evidence.
Judicial sale of Eagle Prestige
[24] Before proceeding further, it is necessary to mention that after I allowed the plaintiff’s appeal in RA 178, the plaintiff’s adjourned application for the sale of the vessel pendente lite was listed for hearing before Lai Siu Chiu J who ordered the judicial sale of the Eagle Prestige on 5 June 2009. Interestingly, the intervener did not appeal against Lai J’s judicial sale order, but instead filed a notice of appeal against my decision on 22 June 2009 without seeking, in the meantime, an order to stay execution of the judicial sale order pending the intervener’s appeal against my decision to the Court of Appeal. The judicial sale of the Eagle Prestige was completed on 25 August 2009, and the proceeds of sale were paid into court on the same day. The sale proceeds have remained with the Sheriff as the plaintiff’s claims are being disputed. As I understand from Ms Ang’s arguments, the mortgage on the Eagle Prestige was created after the plaintiff’s writ in rem was issued.
Jurisdiction in rem against Eagle Prestige
[25] As provided by s 3(1) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (“HCAJA”), the High Court has admiralty jurisdiction to hear and determine:
[26] So far as material, s 4(4) of the HCAJA provides:
[27] Against this statutory background, it is not disputed that the plaintiff whose claim is for breach of the May sub-charter, has to satisfy both ss 3(1)(h) and 4(4) of the HCAJA to maintain the arrest. Conversely, in order to have the arrest set aside, it would have been sufficient for Capital Gate to succeed on either statutory provision. If either statutory provision was not satisfied, the arrest could not be sustained. Even if the statutory provisions were satisfied, the court retains the discretion to set aside the arrest on a separate and independent ground if there was material non-disclosure (see The Rainbow Spring [2003] 3 SLR(R) 362 (“The Rainbow Spring (CA)”) at [37]).
[28] In Summons 1777, the intervener applied for the warrant of arrest to be set aside for material non-disclosure. As stated, there was no application to set aside the writ in rem on jurisdictional grounds under O 12 r 7, or to strike out the writ in rem and action under O 18 r 19 or under the court’s inherent jurisdiction for frivolous or vexatious proceedings. Mr Tan, on behalf of the intervener, explained that there was no dispute that the plaintiff’s claim fell squarely within s 3(1)(h) of the HCAJA having regard to the existence of the May sub-charter of the TS Bangkok made between the plaintiff and EP Carriers. He averred that the plaintiff’s claim arose from the May sub-charter. Furthermore, although the Eagle Prestige was not the ship in connection with which the claim was said to have arisen, the arrest was of a vessel owned by EP Carriers who was the charterer of TS Bangkok at the time the plaintiff’s cause of action arose. There was no contest on the rightful ownership of the Eagle Prestige at the time the writ in rem was issued on 2 December 2008 as ownership had remained constantly with EP Carriers. However, Mr Tan argued that even though the plaintiff had satisfied the requirements of s 3(1)(h) and s 4(4)(b)(ii), the plaintiff must still demonstrate that it had a good arguable case on the merits. Mr Tan contended that the plaintiff’s claim was premature, and went so far as to argue that The Vasiliy Golovnin (CA) in effect changed the in personam test in s 4(4)(b) to a higher threshold, and in doing so, departed from the legal principles enunciated in The St Elefterio [1957] 1 Lloyd’s Rep 283 (“The St Elefterio”).
[29] Ms Ang pointed out that since the same facts were used in arguments, the intervener was muddling issues of a lack of jurisdiction with issues of non-disclosure such that it was not clear if the arguments made were directed to one issue or both. In short, it was far from clear whether the intervener in raising the need to show a “good arguable case” on the merits was mounting a jurisdictional challenge when Summons 1777 was grounded entirely on material non-disclosure.
[30] Mr Tan first raised two broad issues in his written submissions. They are paraphrased as follows:
(i) Whether the arresting party is required to show, at the stage when the warrant of arrest is being challenged (“the challenge stage”) that it has a “good arguable case” on the merits of the claim; and
(ii) Whether the duty of disclosure in applications for warrant of arrest extends to cover plausible defences on the merits of the claim.
In the course of argument, Mr Tan raised a third issue which is whether at the application for a warrant of arrest (“the application stage”), the arresting party is required to show that it has a “good arguable case” on the merits of the claim. The issues will be examined shortly. Suffice it to say at this point of time, I did not accept Mr Tan’s various contentions.
The Court of Appeal’s decision in The Vasiliy Golovnin
[31] Mr Tan’s arguments were supposedly drawn from what was said to be legal propositions laid down in the recent decision of The Vasiliy Golovnin (CA). Before examining The Vasiliy Golovnin (CA) on the three issues identified by Mr Tan and paraphrased in [30], it is necessary that I begin by summarising the relevant facts. A fuller account of the facts is reported in The Vasiliy Golovnin [2007] 4 SLR(R) 277 (“The Vasiliy Golovnin (HC)”). It must also be remembered that the defendant, Far Eastern Shipping Co Plc (“FESCO”), applied (a) to set aside the writ in rem and the warrant of arrest for, inter alia, non-compliance with s 3(1) of the HCAJA (ie. want of jurisdiction) and (b) for the writ in rem and action to be struck out as vexatious and an abuse of process under O 18 r 19 of ROC or under the inherent jurisdiction of the court. At the risk of stating the obvious, the striking out application under O 18 r 19 is a separate process under the ROC and available as a procedural remedy for the summary disposal of clear and wholly unmeritorious, and hence, unsustainable actions. Tan Lee Meng J in Recordtv Pte Ltd v MediaCorp TV Singapore Pte Ltd [2009] 4 SLR(R) 43 at [17] helpfully summarised the meaning of “frivolous or vexatious” and “abuse of process” as decided by our Court of Appeal in two cases:
[32] FESCO as the head owner chartered the vessel Chelyabinsk on amended New York Produce Exchange (“NYPE”) terms to head charterers, Sea Transport Contractors Ltd (“STC”). STC, in turn, sub-chartered the Chelyabinsk on amended NYPE terms to Rustal SA (“Rustal”) for the carriage of a shipment of rice on a voyage from China and India for discharge at Lomé, Togo. The banks who provided financing to Rustal and received the relevant bills of lading as security were Crédit Agricole (Suisse) SA (“Crédit Agricole”) and Banque Cantonale de Genève SA (“BCG”). The relevant bills of lading named Lomé as the port of discharge. The dispute that arose was over the payment of hire for the Chelyabinsk. As a result, FESCO received conflicting instructions from STC and the banks, “Crédit Agricole” and BCG. STC instructed the Chelyabinsk to sail to Lomé, Togo, while the banks gave instructions to discharge the cargo at Douala, Cameroon, in exchange for a letter of indemnity. Two of the three pertinent bills of lading stated the port of discharge to be Lomé, and the third was “any African port.”
[33] One pertinent fact in the case was that STC, on Rustal’s instructions, had requested FESCO to switch the bills of lading to alter the port of discharge of the cargo from Lomé to Douala but the switch never took place. Even without the switch, the banks still wanted the cargo discharged at Douala. FESCO, under instructions to discharge the cargo at Lomé, refused. On discharge, some of the cargo sustained damaged, and FESCO’s P&I Club provided security for the cargo damage. Meanwhile, on 21 February 2006, the banks obtained a Lomé court order for the arrest of the Chelyabinsk in connection with FESCO’s refusal to discharge the cargo at Douala and for damage to cargo. At an inter partes hearing, FESCO successfully opposed the arrest by obtaining an order to set aside of the arrest. The banks did not appeal against the Lomé decision of 24 February 2006. The Lomé court made the following important findings:
(a) The banks could not deal directly with FESCO without going through Rustal and STC, and FESCO could only follow STC’s instructions since Lomé was stipulated as the port of discharge in a number of the bills of lading.
(b) FESCO had not been at fault in proceeding to Lomé on STC’s instructions since STC had control over the commercial management of the Chelyabinsk as charterer.
(c) Douala was not listed as a port of discharge on the bills of lading although the banks claimed that the cargo was bound for Douala.
(d) Sufficient security was given for the claims for loss and damage to the cargo and the banks could not claim that they had suffered any loss.
[34] On 18 March 2006, the banks started in rem proceeding in Singapore and arrested the Vasiliy Golovnin, a sister ship of the Chelyabinsk, in respect of the very same claims earlier made unsuccessfully to the court in Lomé. FESCO duly applied to set aside the writ in rem and warrant of arrest of the Vasiliy Golovnin. The Assistant Registrar, Ms Ang Ching Pin (“AR Ang”) allowed FESCO’s application. The writ in rem and the warrant of arrest of the Vasiliy Golovnin were set aside for three reasons, namely (a) issue estoppel, (b) material non-disclosure and (c) lack of an arguable case against FESCO. On appeal, Tan Lee Meng J affirmed AR Ang’s decision (except for the cargo damage claim, which Tan J did not strike out). Crédit Agricole and not BCG, appealed to the Court of Appeal against Tan J’s decision. However, FESCO’s cross-appeal for wrongful arrest was against both banks.
[35] In deciding against Crédit Agricole, the Court of Appeal held that the bank did not have a “good arguable case” because FESCO had no duty to obey Crédit Agricole, the holder of the bills of lading and named consignee, in deviating to Douala from Lomé. To do so would have made FESCO liable for breach of the head charter and breach of the contracts of carriage contained in or evidenced by the relevant bills of lading. Furthermore, unless the sub-charter provided otherwise, the master was obliged to obey all instructions of STC who was entitled to give employment instructions to FESCO.
[36] On the subject of material non-disclosure, the Court of Appeal held that Crédit Agricole had insufficiently disclosed the existence of proceedings in Lomé. The Court of Appeal noted that there was no real difference between the “essential features of the Togolese and Singapore claims”. The bank should have disclosed to Assistant Registrar, Mr David Lee (AR Lee), who heard the application for a warrant of arrest that the objective of the proposed switch of the bills of lading was to change the port of discharge without which the discharge port remained the same. Further, Crédit Agricole should have disclosed to AR Lee the fact that there had been an inter partes hearing in Lomé and its outcome in FESCO’s favour to the effect that it had correctly performed the terms of the bills of lading contract by discharging the cargo at Lomé. If those facts were disclosed, AR Lee would have made enquiries in order to be better placed to make an informed decision as to whether or not to issue the warrant of arrest.
[37] On issue estoppel, it was not necessary for the Court of Appeal to discuss the plea in detail and the Court of Appeal agreed with Tan J that issue estoppel was made out on the facts.
[38] I now turn to examine The Vasiliy Golovnin (CA) in order to consider the three issues raised by Mr Tan as supporting his arguments. I will deal with issues (i) and (iii) together as the arguments are the same.
“Good arguable case”
[39] In respect of issue (i) set out in [30] above, Mr Tan submitted that paras [51] and [52] of The Vasiliy Golovnin (CA) supported his proposition that, at the challenge stage, the plaintiff is required to show that he has a good arguable case on the merits. Paragraphs [51] and [52] of The Vasiliy Golovnin (CA) read as follows:
[40] At the hearing, Mr Tan expanded on his contention to include issue (iii) which is set out in [30] above. He said he was relying on The Vasiliy Golovnin (CA) for the proposition that at the time of applying for the warrant of arrest, the plaintiff has to satisfy the yardstick of a good arguable case on the merits. He claimed that his contention was reinforced by the Court of Appeal enlarging the arresting party’s duty to disclose material facts to cover plausible defences on the merits. That enlargement of the disclosure duty, so the argument developed, served to affirm the need to show a good arguable case on the merits at the application stage. In doing so and as a result, the Court of Appeal departed from the legal principles in The St Elefterio (see [28] above).
[41] In my view, Mr Tan had misunderstood The Vasiliy Golovnin (CA) which discussed and decided two different challenges: (a) procedural challenge to jurisdiction which encompasses the existence of jurisdiction and the court’s exercise of such jurisdiction; and (b) substantive challenge on the merits of the claim as it was without foundation in the context of an application to strike out the writ in rem and action under O 18 r 19 of the ROC. Turning to specifics, in The Vasiliy Golovnin (CA), there was an application to set aside the writ in rem and warrant of arrest on grounds of want of jurisdiction in rem under s 3(1) of the HCAJA. There was also a further application to strike out the writ in rem and action under O18 r 19 or under the court’s inherent jurisdiction which is a different point from jurisdiction. As stated in [34] above, Tan J struck out all of the banks’ claims other than that relating to damage to the cargo as the action failed to satisfy the threshold of being “arguable” (see [24] of The Vasiliy Golovnin (CA)). On appeal to the Court of Appeal, VK Rajah JA (delivering the judgment of the appellate court) discussed (a) the setting aside of the writ in rem and warrant of arrest (under O 12 r 7) on the ground that the claims did not fall with s 3(1) of the HCAJA, and (b) striking out the writ in rem and action under O 18 r 19 or under the court’s inherent jurisdiction on the ground that the claims were unmeritorious or clearly unsustainable (see [44] of The Vasiliy Golovnin (CA)). As Rajah JA observed (at [48] of The Vasiliy Golovnin (CA)), O 18 r 19 of the ROC is a useful procedural remedy for the summary disposal of an action in rem which is vexatious in the sense that the action is clearly hopeless, unmeritorious and, hence, unsustainable.
[42] As I have alluded to earlier, Mr Tan had argued that paras [51] and [52] of The Vasiliy Golovnin (CA) supported his contentions in issue (i) and issue (iii). The contentions are, in my view, misconceived. Paragraphs [45] to [52] fall under the heading “Requirements for determining whether the claim falls within section 3(1) of the HCAJA” and they have nothing to do with the in personam test in s 4(4)(b) (per Selvam JC (as he then was) who coined the phrase “in personam test” in The Opal 3, [1992] 2 SLR(R) 231 at [10]).
[43] Turning first to the discussions on s 3(1) of the HCAJA in The Vasiliy Golovnin (CA), Rajah JA discussed in [45] to [52] the statutory requirements for determining whether a claim falls within s 3(1)(h) of the HCAJA. Rajah JA began the discussions on s 3(1)(h) of the HCAJA by citing The Jarguh Sawit [1997] 3 SLR(R) 829 (“The Jarguh Sawit”) and quoted with approval extracts from Toh Kian Sing SC, Admiralty Law & Practice (Lexis Nexis, 2 Ed, 2007 at pp 45-46) (“Admiralty Law & Practice”):
[44] M Karthigesu JA in The Jarguh Sawit pointed out, at [42] of the report, that the nature of the legal examination and the standard of proof will be different if one is asserting jurisdiction as compared with liability which is another question. If the dispute is whether the requirements of s 3(1) are satisfied, Karthigesu JA at [43] held that:
[45] Karthigesu JA went on to explain at [44] that it would be later when the action reaches trial stage that the very same facts used to establish jurisdiction must be proved at the hearing of the substantive dispute on liability and the standard of proof then is on a balance of probabilities. In The Jarguh Sawit, the appellants, before filing their defence, applied to set aside the writ in rem under O 12, r 7 on the grounds that the court had no jurisdiction to hear the action as they were not liable in personam to the respondents. On the facts, the procedural issue in The Jarguh Sawit had already been conclusively determined in an earlier interlocutory application and the point was res judicata.
[46] Subsequently, at [52] of The Vasiliy Golovnin, Rajah JA agreed with Karthigesu JA that at the early stage of the application filed to dispute jurisdiction (ie, the challenge stage), all the plaintiff needed to do was to merely demonstrate that “he has a good arguable case that his cause of action falls within one of the categories s 3(1)”. The standard of proof is the “good arguable case” yardstick, that is to say the “plaintiff does not have to establish at this stage that he has a cause of action that might probably prevail in the final analysis” at the trial. In practice, in order for the plaintiff to establish that he has a good arguable case within one of the categories of s 3(1), and using as an example s 3(1)(h), the plaintiff will have to set out the grounds comprising the factual foundation of the claim and the assertion of a legal right consequential upon those grounds. A claim that a breach of contract has occurred is thus a claim for relief founded on grounds where an essential part of the claim is a contract relating to the hire or use of a ship. Significantly, at that stage, the strength of the claim is not relevant as the plaintiff does not have to establish at the outset that he has a cause of action substantial at law (see The St Elefterio (see [29] above); Baltic Shipping Co Ltd v Pegasus Lines SA [1996] 3 NZLR 641 at 647-648 & Admiralty Law & Practice at p 46 (see [43] above)).
[47] The dictum in [52] of The Vasiliy Golovnin (CA) is consistent with the line of authorities that an in rem plaintiff need do no more than demonstrate that the claim falls within one of the claims listed in s 3(1), and that there is no onus on the in rem plaintiff to go beyond that early stage to prove the further point that the claim is likely to succeed unless there is a separate challenge that the action is so frivolous as to be summarily dismissed. This is the approach adopted in The St Elefterio and The Moschanthy [1971] 1 Lloyd’s Rep 37 at 42 (“The Moschanthy”). One must therefore read paras [45] to [52] of the The Vasiliy Golovnin (CA) in the context of the discussion on first, whether or not the plaintiff’s cause of action fell within one of the categories in s 3(1) of the HCAJA and second, in the context of Rajah JA’s agreeing with the observations of Karthigesu JA in The Jarguh Sawit on the standard of proof at the challenge stage.
[48] In relation to the applicable standard of proof, one must always keep in mind the context of the case. In The Jarguh Sawit, the nature of the claim for the purposes of s 3(1)(c) of the HCAJA was not controversial. It concerned an undisputed fact that the claim was in respect of a ship’s mortgage that came within s 3(1)(c). The complaint was whether the current owner of the vessel without notice of the plaintiff’s unregistered mortgage was liable to the respondent and that was an issue to be resolved at trial (see MPH Rubin J’s decision reported in [1995] 2 SLR(R) 913 at [37] which was upheld on appeal in Civil Appeal No 122 of 1995). Similarly, in The Vasiliy Golovnin (CA), the nature of the claim was not in dispute. Crédit Agricole was able to establish, at the challenge stage, a claim for relief founded on grounds an essential part of which was a contract relating to the hire or use of a ship that came within s 3(1)(h). Again context is important.
[49] I digress here a little for a brief reminder on the proper standard of proof of jurisdictional questions under the HCAJA. When jurisdiction in rem is challenged (and the challenge to set aside the writ in rem and warrant of arrest is usually made under O 12 r 7), the proper standard of proof on jurisdiction is on a balance of probabilities. It is clear that where jurisdiction in rem is based on the existence of particular facts or a particular state of affairs, a challenge to jurisdiction can only be resisted by establishing the facts on which it depends. In the event, the particular facts or state of affairs must be established on the balance of probabilities in the light of all the affidavit evidence before the court to determine whether there is jurisdiction in rem. This approach is illustrated by such cases as The Catur Samudra [2010] SGHC 18 (“The Catur Samudra”), The Alexandrea [2002] 1 SLR(R) 813 (“The Alexandrea”), The Andres Bonifacio [1991] 1 SLR(R) 523 (“The Andres Bonifacio”), The Inai Selasih (ex “Geopotes X”) [2005] 4 SLR(R) 1 (“The Inai Selasih “) and the Court of Appeal’s decision reported in [2006] 2 SLR(R) 181. A review of those cases will show that where, for instance, the nature of the claim requires, for example, the establishment of factual preconditions in s 3(1) or contemplates a s 4(4) ownership question, the in rem plaintiff was obliged to prove the existence of the particular jurisdictional fact and to show jurisdiction on a balance of probabilities.
[50] In The Catur Samudra, a recent decision of Steven Chong JC, one of the issues that arose was, inter alia, whether a claim under a guarantee for the liabilities of a related company as charterer under a charterparty was a claim arising out of an agreement relating to the use or hire of a vessel within the scope of s 3(1)(h) of the HCAJA. The plaintiff was required to satisfy the burden of proof on a balance of probabilities in respect of an essential jurisdictional issue. In that case, the nature of the claim went to the heart of the jurisdiction in rem, and at the challenge stage, it was for the plaintiff to prove on a balance of probabilities the jurisdictional issue in question.
[51] The Alexandrea concerned the supply of contaminated marine fuel oil to the vessel, Front Melody, resulting in damage to Front Melody’s machinery. The plaintiff commenced an action in rem against the Alexandrea and arrested the vessel. One of the grounds upon which the court’s jurisdiction was challenged by the defendant was that the plaintiff’s claim did not arise “in connection with a ship” (see s 4(4) of the HCAJA). The High Court held that the Front Melody and not the Alexandrea was the ship in connection with which the claim arose. The plaintiff had to prove on a balance of probabilities the jurisdictional issue in question.
[52] In The Inai Selasih, the plaintiff there entered into a joint venture with the defendant pursuant to a memorandum of understanding (the “MOU”). Thereafter, the plaintiff provided a dredger, the Inai Seroja, to the defendant for its use. Various claims under the MOU arose between the parties and the plaintiff eventually commenced proceedings against the defendant and arrested the Inai Selasih, a vessel owned by the defendant. The defendant applied to set aside the writ in rem and the warrant of arrest on the basis, inter alia, that it was not the charterer of the Inai Seroja because the charterparty relied upon by the plaintiff in the in rem action was a sham, and it could not have the effect of conferring the status of charterer on the defendant. The High Court held that the onus was on the plaintiff to establish, on a balance of probabilities, that the defendant was the charterer of the Inai Seroja when the cause of action arose. That burden was not discharged as the requirements of s 4(4) were not satisfied (see the Court of Appeal’s decision reported in [2006] 2 SLR(R) 181 at [15] upholding the High Court on this point).
[53] In The Andres Bonifacio, the plaintiffs arrested the Andres Bonifacio as security for their claim arising from the charter of another vessel. The defendant applied to set aside the writ in rem. The main issue for determination was whether the defendant was the beneficial owner of the Andres Bonifacio. Karthigesu J (as he then was) decided (at [47]) that
The Court of Appeal in [1993] 3 SLR(R) 71 upheld Karthigesu J’s findings on beneficial ownership.
Unmeritorious substantive claim
[54] I now come to the other part of The Vasiliy Golovnin (CA) relating to the question of whether the banks’ claims were unmeritorious or clearly unsustainable (see [44] of The Vasiliy Golovnin (CA)). On the facts of that case, a good starting point is the test of jurisdiction under s4(4)(b) (ie, the in personam test). It is important to bear in mind the in personam test in two contexts. The first concerns what has been described as “the low threshold of the merits enquiry” (“Situation 1”), and the second is where the proceedings are frivolous or vexatious or otherwise an abuse of process so as to warrant halting such proceedings in limine by striking out the action under O18 r 19 of ROC or under the court’s inherent jurisdiction (“Situation 2”). Under Situation 2, the merits of the claim are examined as a summary disposal of the action is being sought. Notably, The Vasiliy Golovnin (CA) was concerned with Situation 2. In contrast, the present case falls typically within Situation 1.
[55] In The St Elefterio, the defendant shipowner applied to set aside the writ in rem arguing that the plaintiff’s claim against the defendant for damages arising out of the antedating of the bills of lading did not fall within s 1(1) (h) of the Administration of Justice Act 1956 (“the 1956 Act (UK)”) (our s 3(1)(h) of the HCAJA). Willmer J held that the words “claims arising out of any agreement relating to the carriage of goods in a ship” in s 1(1)(h) were wide enough to cover claims in tort as well as in contract. As such, the plaintiff’s claim came within s 1(1)(h) and (g) and it was properly brought against the vessel St Elefterio under s 3(4) of the same Act (our s 4(4) of the HCAJA). The question whether the court had jurisdiction to entertain the plaintiff’s claim in rem against the St Elefterio was answered by reference to the nature of the claim as put forward without going beyond that to ask whether it was likely to succeed or not in the final analysis. In construing the wording of s3(4)(b) (the equivalent of our s 4(4)(b)), Willmer J made clear that the existence of a good defence to a claim would not “negate the court’s admiralty jurisdiction”. The principles enunciated by Willmer J in his judgment (at 287-288) are reproduced here in extenso as follows:
[56] It must be highlighted that the only application before Willmer J in The St Elefterio was the application to set aside the writ and warrant of arrest on the basis that the court had no jurisdiction in rem. There was no application to strike out the writ in rem and action as disclosing no cause of action, or that the proceedings were frivolous, vexatious or otherwise an abuse of process. One other fact to note in The St Elefterio is that the relevant agreement in s 1(1)(h) of the 1956 Act (UK) had in fact been made between the two parties to the action. In addition, and this is a significant distinction to note, the further point on likely success is relevant, as Willmer J recognised in his judgment, only if the defendant separately contends that the writ in rem and action should be struck out on the ground that it is frivolous, vexatious or otherwise an abuse of process (ie, Situation 2 as in [54] above). The action is said to be vexatious because it is unlikely to succeed (see [31] above). This separate process is brought under O18 r 19 of the ROC or under the court’s inherent jurisdiction. As McKay and Henry JJ correctly observed in Baltic Shipping v Pegasus Lines SA at 650 (see [46] above):
[57] In short, it is open to a defendant to apply at an early stage of the proceedings for the writ in rem and action to be struck off on the ground that the action has no chance of success and is, therefore, vexatious. It is at this stage of striking out application that the court is asked to assess the sustainability of the action. It is at this stage of the striking out application that the validity or strength of the claim will be relevant, and the burden on the issue of non-liability lies on the defendant to show that the case is wholly and clearly unarguable. If there is any arguable basis put up by the plaintiff that the action could succeed then the court should not order the striking out of the action. In The Vasiliy Golonvin (CA), the hopelessness of the plaintiff’s claim was beyond doubt. Crédit Agricole could not show that it had an arguable case for the breach of contract arising from the discharge of the cargo at Lomé, and the Court of Appeal concluded that for that “reason alone its claim ought to be struck out” (see [78] of The Vasiliy Golonvin (CA)).
[58] From the analysis of The Vasiliy Golonvin (CA) and explanation above, there is no substance and merit in Mr Tan’s contentions on issue (i) and issue (iii). There was no basis or room for Mr Tan’s contention that The Vasiliy Golovnin (CA) changed the position at law enunciated in The St Elefterio which was followed in The Wigwam [1981-1982] SLR(R) 689 (“The Wigwam”). If The St Elefterio is no longer good law in Singapore, the Court of Appeal would have explicitly said so. The St Elefterio was not even referred to by its case name in The Vasiliy Golovnin (CA). In fact, the Court of Appeal in [49] of the judgment quoted with approval Admiralty Law and Practice where the author had at pp 45-46 of the text summarised the legal principles from The St Elefterio which were followed in The Wigwam. The St Elefterio received approval for the propositions that
[59] In The Wigwam, the claim there was brought under s 3(1)(l) and (m) of the HCAJA. Following The Elefterio, FA Chua J held that the plaintiff was not required to prove at the outset that his cause of action was substantial in law. Chua J specifically noted that there was no suggestion that the proceedings were frivolous or vexatious. Further, the affidavits had disclosed conflicting evidence which could only be resolved at trial. Chua J’s decision was upheld by the Court of Appeal (see [1984] SGCA 24 at [12]).
[60] The assumption under s 4(4)(b) of the HCAJA- that a party would be liable on the claim in an action in personam on the assumption that the action succeeded – is the default position so long as there is no suggestion that the claim is frivolous or vexatious or otherwise an abuse of process (ie, Situation 1 as in [54] above). This default position is reflected in O70 r 4(7)(a) of the ROC which requires the affidavit leading the warrant of arrest to state the name of the person who would be liable on the claim in an action in personam. Willmer J in The St Elefterio left open the possibility of striking out the action if the action on the evidence is frivolous or vexatious or otherwise an abuse of process (ie, Situation 2 as in [54] above). Choo Han Teck JC (as he then was) in Lok Maheshwari [1996] SGHC 212 cited The St Elefterio and The Wigwam and observed as follows:
[61] In that case, the plaintiffs supplied bunkers and marine fuels to the Lok Maheshwari. This was done pursuant to a telefax request on 10 January 1996 stating the buyer to be “the master and/or owner and/or operator and Portserv Limited”. On the same day, the plaintiffs received a telefax from “Portserv Limited”, a company in Canada, stating that the vessel would arrive in Singapore on 12 January 1996. The next day, the master of the Lok Maheshwari sent a telex to the plaintiffs stating “…Understand u stemming IFO 200mt n MDO 50 mt outside Singapore Port limits as advised by Transmar Shipping…”. The vessel was at all material times on a time charter to Halla Merchant Marine Co Ltd of Seoul, Korea who sub-chartered the vessel to the Transmar Shipping referred to in the master’s telex of 11 January 1996. In the circumstances, the defendants, owners of the Lok Maheshwari, refused to pay on an invoice sent by the plaintiffs for the supply of the bunkers and marine fuels. Subsequently, the plaintiffs sued the defendants and arrested the vessel in an action in rem. The defendants then applied to strike out the writ of summons on the grounds that the court had no jurisdiction over the claim since the defendants were not the party liable in personam. The defendants’ application was allowed. Choo JC held that the plaintiffs’ claim was frivolous as “[i]t was clear that the party whom the Plaintiffs intended to contract with was the party who requested the bunkers, and that was undisputedly, Transmar Shipping, the sub-charterers.” Even on the plaintiffs’ own case, the defendants would clearly not be liable in personam for the plaintiffs’ claim. There was clear affidavit evidence that the claim against the defendant was misconceived as the defendant was not the contracting party. It was therefore plain that the action was unsustainable and, in the circumstances, frivolous. Choo Han Teck JC at [18] of the judgment said:
[62] Similarly, in The Rolita (1988 WL 1057731), an unreported decision of the Hong Kong High Court No AJ 105 of 1988, 22 August 1988, Cruden J (at 6) observed:
[63] Cruden J’s decision was upheld on appeal (see [1989] 1 HKLR 394). The appellate court reaffirmed The St Elefterio approach as it covers
[64] As I mentioned earlier, The St Elefterio is a case where the relevant agreement had in fact been made between the two parties to the action. In other words, there was no dispute on the proper defendant in an in personam action and there was no question that the plaintiff should have sued someone else in personam in respect of the claim arising under the bills of lading. There have been cases where the writ in rem is sought to be set aside under O 12 r 7 on the ground that the claim did not fall within s 4(4) because the plaintiff should have sued someone else in personam. In other words, there was no subsisting claim in personam against the person who was at that time the owner of the vessel, and there was no jurisdiction in rem because the basis of an action in rem arose from the personal liability of the owner of the vessel. The common argument in the decisions of The Thorlina [1985-1986] SLR(R) 258, The Lok Mashewari, The AA V [1999] 3 SLR(R) 664 (“The AA V”) and The Rainbow Spring [2003] 2 SLR(R) 117 (“The Rainbow Spring (HC)”) and The Rainbow Spring (CA) reported in [2003] 3 SLR(R) 362 was that the plaintiff should have sued someone else in personam, and there was clear evidence of the absence of a subsisting claim against the defendant shipowner at the time the writ in rem was filed. There was want of jurisdiction in rem. The substance of the underlying claim was factually inseparable from the basis of jurisdiction. The jurisdictional fact in dispute could on the evidence be summarily disposed of. In The Vasiliy Golovnin(CA), the relevant agreement under s 3(1)(h) of the HCAJA was between the parties to the action, namely Crédit Agricole and FESCO. At the risk of repetition, FESCO, at the challenge stage, separately argued that the bank’s claim was without foundation; it was hopeless and was bound to fail. FESCO had applied to strike out the writ in rem and action under O 18 r 19 or under the inherent jurisdiction of the court, an avenue recognised in the St Elefterio.
Non-disclosure of material facts
The law
[65] It is not in dispute that non-disclosure of material facts is an independent ground upon which the court will, as a general rule, set aside any order made in favour of an applicant in interlocutory proceedings. The duty to disclose is to inform the court of any facts which the plaintiff knows which might tell in the defendant’s favour (per Warner J in Re A Debtor (No 75 of 1982), ex p The Debtor v National Westminster Bank [1983] 3 All ER 545 at 551). There is no doubt that the duty to disclose applies to an in rem plaintiff applying ex parte for a warrant of arrest under O 70 r 4 of the ROC.
[66] In the present case, Capital Gate, the intervener, only applied to set aside the warrant of arrest for material non-disclosure. Although no application was made under O 12 r 7 or O 18 r 19 on the ground that the claim did not fall within s 4(4) of the HCAJA, suggesting that there was jurisdiction to sue in rem and that the procedural requirements in O 70 r 4 were met, the avenue of non-disclosure as an independent ground to discharge the warrant of arrest was available to Capital Gate. In short, it is possible to apply to set aside the warrant of arrest because either there was a lack of in personam liability or there was non-disclosure of material facts (see The Rainbow Spring (CA) at [35] – [37]). In The Harima [1987] 2 HKC 118 (“The Harima”), the defendant there (not unlike Capital Gate) did not apply under O 12 r 8 of the Rules of the Supreme Court (HK) to set aside the writ in rem or strike out the action under O 18 r 19 on the ground that the claim did not fall within s 21 of the Supreme Court Act in the (UK) (the equivalent of our s 4(4) of the HCAJA). The setting aside was only on the ground of non-disclosure of material facts. Hunter J in The Harima advocated that the proper course was for the defendant to apply to strike out the action, rather than to rely on non-disclosure which was a backdoor route. As Hunter J reminded, there was no application before him to strike out and that even if there was an application to strike out, he would not have acceded to it. Although there were difficulties in the plaintiff’s case with a back-dated bill of lading and allegations of illegality arising from the back-dating, Hunter J did not think it was possible to say that there was no arguable case so as to warrant a striking out. On the issue of setting aside of the warrant of arrest on the basis of non-disclosure, Hunter J said (at 405):
[67] Nonetheless, the Hong Kong Court of Appeal recognised that non-disclosure could be an independent ground for discharging the warrant of arrest, but on the facts of that case, the appellate court upheld Hunter J’s decision that the legality of the bill of lading was not directly relevant to the issue of the warrant of arrest, and as such the plaintiff was not obliged to depose to the merits of its claim when it applied for the warrant following the legal principles enunciated in The St Elefterio and The Moschanthy.
[68] It is settled law in Singapore that (a) non-disclosure of material facts is an independent ground for setting aside an arrest, and (b) the court retains an overriding discretion whether or not to set aside or discharge the arrest for non-disclosure. Judith Prakash J in The Rainbow Spring (CA) referred to The AA V and The J Faster [2000] 1 HKC 652 as decisions where the courts in Singapore and Hong Kong have acknowledged that an arrest can be set aside because either there was a lack of in personam liability or there was non-disclosure of material facts.
[69] Rajah JA reaffirmed Prakash J’s dicta in The Rainbow Spring (CA)(at [37]) that the duty to make full and frank disclosure to the court was an important bulwark against the abuse of the arrest process and went on to quote the rest of [37] which stated:
Materiality of “plausible defences”: Meaning and scope
[70] I now come to Mr Tan’s issue (ii) as set out in [30] above. It is not controversial that material facts that have to be disclosed are determined by what is “material” to the grant or refusal of the ex parte application for the issue of the warrant. Rajah JA in The Vasiliy Golovnin (CA) reiterated that facts are material if they have a “bearing on the decision-making process or outcome of the original application” to issue a warrant of arrest (at [88]) and the scope of disclosure is based on what is “reasonable in the given circumstances at the time of the arrest” (at [90]). Elaborating, Rajah JA at [87] said:
[71] In his review of The Vasiliy Golovnin (CA) in the Singapore Academy of Law Annual Review, (2008) 9 SAL Ann Rev 54, Toh Kian Sing SC (at 2.13) observed that the decision appears to have extended the duty to disclose to “defences that might be reasonably raised by the defendant” in an application for the arrest of a vessel under O 70 r 4 of the ROC. This part of my decision examines whether or not The Vasiliy Golovnin (CA) indeed enlarged the duty to disclose to include plausible defences to the plaintiff’s claim. I interpose to mention that central to the intervener’s argument in RA 178 was cl 90 of the May sub-charter, which Mr Tan, for the intervener, said gave the defendant a complete defence to the plaintiff’s claim for the grounding damage. Mr Tan’s view of the matter invariably raised the question of the merits of the claim for the grounding damage. His argument rested on the statement in [87] of The Vasiliy Golovnin (CA) that the duty of disclosure extended to “plausible, and not all conceivable or theoretical defences”. That dictum, Mr Tan argued, imposed a duty on the in rem plaintiff to inform the court of plausible defences to the claim which the defendant would seek to raise at the trial, and a failure to make full and frank disclosure of the plausible defences was sufficient ground to discharge or set aside the warrant of arrest. Putting Mr Tan’s argument in perspective, the real issue before me was whether or not the merits of the claim could be called into question in the context of an application for a warrant of arrest so much so that a failure to refer to cl 90, an argument which the defendant may seek to raise in answer to the plaintiff’s claim at the trial, should be characterised as a failure to make full and frank disclosure.
[72] In my view, the expression “plausible defences” has to be understood in the light of the realities of the situation in The Vasiliy Golovnin (CA). The claim was held to be “really implausible” and unsustainable; the point that the cause of action was frivolous and vexatious could easily be taken and determined summarily based on plainly cogent affidavit evidence. In a way, the expression “plausible defence” is being used loosely; the meaning of “plausible defences” may be culled from the context and surrounding circumstances. First, The Vasiliy Golovnin (CA) was a case falling under Situation 2 where the merits of the claim including the defences to the claim were examined. Second, from a broader perspective, “plausible defences” are matters referable to objections (factual and/or legal) to the claim being brought in the first place, or to the arrest being mounted at all. They are material facts which, objectively speaking, are of such weight that their omission, at the application stage, is tantamount to or constitutes an abuse of process. Such an abuse of process is strictly not a defence to the claim; it is an objection to the claim or arrest being brought at all. In the context of the duty to make full and frank disclosure, a failure to disclose material facts that constituted the abuse, would be a ground for discharging or setting aside the warrant of arrest for material non-disclosure.
[73] I now come to the reasons for holding the view that in the context of an application for a warrant of arrest, the duty to disclose “plausible defences” is not generally directed at defences to the claim that may be raised at the trial in answer to the plaintiff’s claim but in a broader perspective to matters that constitute an abuse of the arrest process (see [72] and [74]). In a case falling under Situation 2, there will be matters (factual and/or legal) of such weight as to deliver the “knock out blow” to the claim summarily, and, on any reasonable view, their omission, at the application stage, is tantamount to or constitutes an abuse of process. These matters are likely to be, or at the very least, overlap with defences that deliver the “knock out blow” to the claim summarily, and it is their omission that is likely to or may mislead the court in the exercise of its discretionary powers of arrest.
[74] At the application stage, one must be mindful of the distinction between questions of jurisdiction and questions of merits of the claim (see The Jarguh Sawit and The St Elefterio). If the expression “plausible defence” is referable to a plausible defence to the claim, it will invariably raise the question of the merits of the claim, and the question that arose in RA 178 was this: are the merits of the claim (not jurisdiction in rem) now relevant in the context of an application for a warrant of arrest under O 70 r 4 of ROC even under Situation 1 as in [54] above because of The Vasiliy Golovnin (CA)? Or is the requisite disclosure of material facts, at the application stage, still confined primarily to considerations of jurisdiction and not to merits so that the failure to refer to defences to the claim (which the defendant may seek to raise in answer to the plaintiff’s claim at the trial) should not generally be characterised as a failure to make a full and frank disclosure? The answer is that there is no change to what has previously been established by case law. The concerns of the court at the application stage are firstly, with considerations of jurisdiction in rem (and generally not the merits of the claim) and secondly, disclosure of material facts which are germane to considerations of jurisdiction in rem and overlaying that is the absence of facts and circumstances suggesting an abuse of the arrest process. Notably, The Vasiliy Golovnin (CA) applied existing legal principles to the facts of the case which brought into sharp focus the interplay between the court’s twin concerns at the application stage for a warrant of arrest (as to what the twin concerns are see also [81]-[82] below) and the duty to make full and frank disclosure. For purposes of the present discussion, at the application stage, the distinction between questions of jurisdiction and questions of the merits of the plaintiff’s claim must be appreciated. The jurisdiction in rem principles allow the in rem plaintiff to arrest the defendant’s vessel to obtain security based on the plaintiff’s best arguable case (see The Moschanthy at [47] above), rather than with the question “who is likely to win”. The line of authorities show that at the application stage, an in rem plaintiff is required to show that the claim falls within one of the heads of claim listed in s 3(1) rather than the strength of the claim and that there is no onus on the in rem plaintiff to go further at that early stage to show that the claim is likely to succeed so long as it cannot be said that the action is an abuse of process or that it is so obviously frivolous and vexatious as to be open to summary dismissal. What this means and amounts to is that in typically Situation 1 cases, the in rem plaintiff is generally not required to go to the merits of the claim at the application stage. Undoubtedly, there may be many points which would be relevant to the ultimate merits of an action, but which could not on any reasonable view affect the court in deciding whether to grant the application for a warrant of arrest. Thus, defences to the claim such as exclusion clauses and Hague Visby Rules defences go to the merits of the claim, not to jurisdiction, and they need not be disclosed as they are not material to the grant or refusal of the ex parte application.
[75] Rajah JA approved in [49] of The Vasiliy Golovnin (CA) the various legal propositions summarised in Admiralty Law and Practice at pp 45-46 and that included endorsing the proposition in The St Elefterio that at the interlocutory stage save for frivolous claims, the in rem plaintiff need not establish at the outset that he has a cause of action sustainable in law, and neither the existence of a good defence to a claim would negate the court’s admiralty jurisdiction. Enlarging the duty to disclose plausible defences would effectively let in an aspect of considering the merits of the claim by the backdoor after agreeing with the aforementioned principles in The St Elefterio and that could not have been intended by Rajah JA. In my view, the non-disclosure of defences that the defendant could raise at the trial in answer to the plaintiff’s claim (as that pertains to the ultimate merits of the action and the question of who is likely to win), are generally not characterised as a failure to give full and frank disclosure unless (and this is the qualification (ie Situation 2) mentioned in The St Elefterio (see [56] above)) they are matters that show up the claim as an abuse of process, or one that it is so obviously frivolous and vexatious as to be open to summary dismissal and, on any reasonable view, their omission, at the application stage, is tantamount to or constitutes an abuse of process. From a broader perspective, failure to disclose matters showing that the claim or arrest should not have been brought at all, are material facts that constitute the abuse of process. Simply put, they constitute matters of such weight that their omission is likely to or may mislead the court in the exercise of its discretionary power of arrest (see [72] above).
[76] A strong and direct pointer in support of the view subscribed comes from the specific example given in [87] of The Vasiliy Golovnin (CA). Immediately following the sentence stating that the duty to disclose extends to only “plausible, and not all conceivable or theoretical, defences”, Rajah JA followed up with an example of plausible defences that would constitute material facts that have to be disclosed since they would have a “bearing on the decision-making process or outcome of the original application” to issue a warrant of arrest (at [88]) and are also “reasonable in the given circumstances at the time of the arrest” (at [90]). Rajah JA’s illustration found at [87] is as follows:
[77] Putting that example into a legal framework, it is of a party seeking to arrest a vessel or sister ship in respect of the same claim in one jurisdiction after another, and it might well be an abuse of the arrest process to permit a second arrest. Rajah JA’s example is drawn from the factual circumstances leading to the arrest and subsequent release of the Chelyabinsk by the Lomé court, and more pointedly, their relevance to the question of whether the sister ship arrest in Singapore in respect of the same claim could in any way be regarded as an abuse of the arrest process and hence oppressive. In that case, the second arrest, including the issue as to whether the bringing of the action based on the same claim as in the Lomé proceedings, was an abuse. It is not always the case that the mere fact that a plaintiff has arrested a vessel which has previously been released by order of a court of competent jurisdiction will amount to an abuse of the arrest process (see for example, The Blue Fruit [1979-1980] SLR(R) 238). A lot depends on the circumstances, and that is what the court will want to know at the application stage. It is for the arresting party to explain fully the propriety of the second arrest, and show that the second arrest is not an abuse of the arrest process. In short, the court will want to know whether it is oppressive and vexatious to re-arrest. Obviously, if the application to arrest is proper, an abuse of process argument cannot be founded on the basis that the consequences of the proper application may produce an oppressive result. The non-disclosures in The Vasiliy Golovnin (CA), in a nutshell, were with the question of vexatiousness arising from the Lomé proceedings, and the arrest was an abuse of process and unjustly oppressive. The present case is very different (see [86] to [116] below).
[78] In the context of the facts of The Vasiliy Golovnin (CA), the problems in the background for the banks in the arrest application, and of which AR Lee was unaware of, were the Lomé court’s (a) finding that sufficient security had been provided for the loss and damage to cargo claims; and (b) finding in FESCO’s favour on the very same claims that were being pursued in Singapore against a sister ship. The clear stipulation in the relevant bills naming Lomé as the port of discharge, and the objective behind the proposal to switch bills was to change the port of discharge, but no switch materialised in the end. Certainly, they were matters that showed the breach of contract claim to be without foundation. All those facts were found by the Court of Appeal to be material facts and circumstances that ought to be disclosed as they made it difficult for the banks to apply to court for a warrant of arrest on the reasonable basis that there was valid breach of the contracts of carriage contained in the relevant bills. The banks were aware of all those facts, but went before the court in effect on the basis that there was no issue or problem as to the banks’ rights to claim in contract. The Court of Appeal held that this basis was not in fact the case, and it was something that was either known or ought to have been appreciated. The failure of disclosure could not be regarded as proceeding from a mere oversight or from a pardonable mistake as a result of haste. In the light of the decision of the Lomé court, it would be an abuse of the arrest process for the banks to arrest again by re-running the same claim for breach of contract which had already been determined in FESCO’s favour at the inter partes hearing in Lomé.
[79] Quite clearly, the arrest of the Vasiliy Golovnin in Singapore was based on obviously frivolous and vexatious claims (“really implausible claims”) having regard to the fact that the Lomé court ordered the release of the Chelyabinsk after an inter partes hearing that found, inter alia, that the discharge of the cargo at Lomé was pursuant to the contract of carriage that named the port of discharge as Lomé. The first arrest of the Chelyabinsk in Lomé and the decision of the Lomé court would have a “material bearing on the decision making process or the outcome of the original application” (see [88] of The Vasiliy Golovnin). Not only were the prior Lomé proceedings and outcome considered as material facts, the objective for the proposed switch of the bills of lading was also important. On the prior proceedings, Rajah JA observed (at [99]):
[80] Again at [100], Rajah JA made the same point:

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The “Eagle Prestige”

Grounds of decision

Background facts and circumstances leading to the arrest of the Eagle Prestige

Summons No 1777 of 2009 to set aside the warrant of arrest and outcome

Application to adduce further affidavit evidence after first hearing

Judicial sale of Eagle Prestige

Jurisdiction in rem against Eagle Prestige

The Court of Appeal’s decision in The Vasiliy Golovnin

Unmeritorious substantive claim

Non-disclosure of material facts

The law

Materiality of “plausible defences”: Meaning and scope