Chimbusco Pan Nation Petro-chemical Co Ltd v The Owners And/or Demise Charterers Of The Ship Or Vessel “Decurion

CourtCourt of Appeal (Hong Kong)
Judgment Date12 April 2013
Citation[2013] 2 HKLRD 930
Judgement NumberCACV97/2012
Subject MatterCivil Appeal
CACV97/2012 CHIMBUSCO PAN NATION PETRO-CHEMICAL CO LTD v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL “DECURION”

CACV 97/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 97 OF 2012

(ON APPEAL FROM HCAJ NO. 141 OF 2010)

________________________

Admiralty action in rem against:
the ship or vessel “DECURION” (IMO no. 8302545)

BETWEEN

CHIMBUSCO PAN NATION PETRO-CHEMICAL CO LTD Plaintiffs
and
THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL “DECURION” Defendants

________________________

Before: Hon Fok, Chu JJA and McWalters J in Court
Date of Hearing: 12 March 2013
Date of Handing Down Judgment: 12 April 2013

________________________

J U D G M E N T

________________________

Hon Fok JA:

A. Introduction

1. This is an appeal from a judgment of Reyes J dated 4 May 2012. The issue in this appeal is whether the Admiralty jurisdiction in rem of the High Court has been properly invoked by the plaintiffs (Chimbusco) against the vessel “DECURION” in respect of claims for the supply of bunkers to that and 10 other vessels. Subject to a preliminary question of whether it is open to the defendants (Maruba SCA) to challenge jurisdiction, the appeal involves, as a matter of law, an examination of the circumstances in which a party may be said to be “in control of” a ship for the purposes of the exercise of Admiralty jurisdiction in rem and, as a matter of fact, whether those circumstances are satisfied in this case.

B. Procedural background and judgment below

2. Between April 2008 and August 2010, Chimbusco supplied bunkers to 11 ships, including the “DECURION”. The contractual arrangements under which the bunkers were supplied are described later in this judgment (in Section E). Chimbusco claims that it has not been paid the price of US$4,217,419.89 for the bunkers supplied.

3. On 20 August 2010, Chimbusco issued a writ in rem in this action naming the Owners and/or Demise Charterers of the ship or vessel “DECURION” as defendants and obtained a warrant for the arrest of that vessel in Hong Kong.

4. On 25 August 2010, solicitors previously acting for the defendants filed an acknowledgment of service on behalf of the defendants. On 10 September 2010, the action was stayed by agreement but the stay was terminated by Chimbusco on 20 January 2011.

5. On 31 May 2011, the vessel was sold pursuant to order of the court. The proceeds of sale amounted to US$5,208,107 but there are some 7 other in rem judgments and claims or caveats pending against that security said to total in excess of US$12 million.

6. On 29 June 2011, Chimbusco filed its statement of claim in the action. On 27 July 2011, the defendants applied for an extension of time in which to serve their defence. On 1 September 2011, Reyes J refused to extend time for the service of the defence and, consequently, on 6 September 2011, Chimbusco applied for judgment in default of defence. On 16 September 2011, Reyes J entered judgment in default against the defendants for US$4,217,419 plus interest and costs.

7. On 31 January 2012, the Court of Appeal[1] allowed the defendants’ appeal, set aside the refusal to extend time for the defence and the judgment in default of defence and granted the defendants 14 days to file their defence.

8. On 14 February 2012, within the time limited for the filing and service of their defence, the defendants applied pursuant to O.12 r.8 for a declaration that the Court has no in rem jurisdiction over the defendants in respect of Chimbusco’s claim insofar as it related to claims other than for the price of unpaid bunkers supplied to the “DECURION” on the ground that Chimbusco did not bring itself within the requirements of s. 12B(4) of the High Court Ordinance (Cap. 4).

9. The defendants’ summons under O.12 r.8 was heard by Reyes J on 30 April 2012. By his judgment dated 4 May 2012 (the Judgment), Reyes J declared that the Court had no jurisdiction in rem in respect of Chimbusco’s claim insofar as it related to claims other than for the price of unpaid bunkers supplied to the “DECURION”. He also made an order striking out those parts of the statement of claim which related to the claims for the price of unpaid bunkers to those 10 other vessels.

C. This appeal

10. Chimbusco appeals contending that the Judgment should be set aside and that instead the defendants’ summons under O.12 r.8 should be dismissed.

11. At the outset of the appeal, Chimbusco applied to amend the notice of appeal to advance certain other arguments including preliminary jurisdictional arguments. We heard argument on the proposed amended grounds of appeal contained in the amended notice of appeal dated 12 March 2013 on a de bene esse basis.

D. Have the defendants submitted to the jurisdiction of the court?

12. As a preliminary matter, it was contended by Mr Michael Thomas SC for Chimbusco that the defendants had submitted to the in rem jurisdiction of the court so that the Judge was wrong to entertain the defendants’ O.12 r.8 summons. There are a number of bases on which it was said that the defendants had submitted to jurisdiction.

(1) First, it was contended that, on the defendants’ own case, Chimbusco was entitled to proceed in rem against the “DECURION” in respect of the supply of bunkers to that vessel, so that, upon the defendants’ acknowledgment of service of the writ on 25 August 2010, the proceedings became in personam proceedings against the defendants and in rem against the “DECURION”. Thereafter, Chimbusco was entitled to proceed to claim in personam against the defendants for the full amount of the claim including the bunkers supplied to the other 10 vessels.

(2) Secondly, it was contended that the defendants’ O.12 r.8 summons was defective because none of the various orders available under that rule was sought.

(3) Thirdly, the orders that were in fact sought under the O.12 r.8 summons amounted to a submission to the jurisdiction if there was a lack of jurisdiction.

D.1 The effect of the defendants’ acknowledgment of service

13. The first preliminary argument requires an examination of the nature of an in rem action, the procedure by which such an action can be pursued and how jurisdiction is exercised or challenged. It would seem that, if good, this point did not occur to the Court of Appeal which heard the appeal against the Judge’s refusal to extend time for the service of the defence and the consequential entry of default judgment, the Judge below (who was the Judge in charge of the Admiralty List at the time), as well as Chimbusco’s solicitors and counsel appearing on its behalf on that previous appeal and below (not Mr Thomas). That, of course, does not reflect on the legal merits of the point but it would, at the very least, be relevant to the question of costs.

14. Admiralty jurisdiction is statutory, being conferred by s. 12A of the High Court Ordinance. In the present case, there is no dispute that Chimbusco’s claim for the price of the bunkers supplied to the “DECURION” and the other 10 vessels is within s. 12A(2)(l), being a “claim in respect of goods or materials supplied to a ship for her operation and maintenance” and therefore is one within the Admiralty jurisdiction of the Court of First Instance pursuant to s. 12A(1)(a).

15. The mode of exercise of the Admiralty jurisdiction is dealt with by s. 12B: see Re Resource 1 (2000) 3 HKCFAR 187 per Sir Anthony Mason NPJ at p. 210G. In the present case, s. 12B(4) is relevant and provides:

12B. Mode of exercise of Admiralty jurisdiction

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

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

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

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

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

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

In addition, one must also look to the procedural rules laid down in the Rules of the High Court.

16. The writ issued by Chimbusco on 20 August 2010 was an in rem writ in the prescribed form (O.75 r.3(1)) and it was that writ that was served on the vessel “DECURION” in accordance with the procedure for the service laid down by O.75 r.8. The writ was not an in personam writ,[2] which is a different prescribed form (O.75 r.3(2)). As noted in Hong Kong Civil Procedure 2013 Vol. 1 at Note 75/1/7 (p. 1286):

Action in rem and in personam – If it is desired to commence proceedings both in rem and in personam separate writs must be issued.”

17. The submission by a shipowner to the jurisdiction of the Court in an Admiralty action in rem renders him personally liable (in personam) on the claim. See, The Gemma [1899] P. 285 per A.L. Smith LJ at pp. 291-292:

“… when persons, whose ship has been arrested by the marshal of the Admiralty Court, think fit to appear and fight out their liability before the Court, the form of the proceedings in the Admiralty Court shew – … – that the persons so appearing, as the defendants have done in the present case, become parties to the action, and thereby become personally liable to pay whatever in the result may be decreed against them; and the action, though originally commenced in rem, becomes a personal action against the defendants upon appearance.”

(Emphasis added)

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