Credit Suisse Ag v The Owner Of The Ship Or Vessel “Brightoil Legend”

CourtCourt of First Instance (Hong Kong)
Judgment Date16 April 2020
Neutral Citation[2020] HKCFI 613
Subject MatterAdmiralty Action
Judgement NumberHCAJ15/2019
HCAJ13/2019 CREDIT SUISSE AG v. THE OWNER OF THE SHIP OR VESSEL “BRIGHTOIL GALAXY”

HCAJ 13/2019

[2020] HKCFI 613

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 13 OF 2019

Admiralty action in rem against: the ship or vessel “BRIGHTOIL GALAXY” (IMO No. 9602631)

___________________________

BETWEEN
CREDIT SUISSE AG Plaintiff
and
THE OWNER OF THE SHIP OR VESSEL “BRIGHTOIL GALAXY” Defendant
and
TOYOTA TSUSHO CORPORATION Intervener

___________________________

HCAJ 14/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 14 OF 2019

Admiralty action in rem against: the ship or vessel “BRIGHTOIL LUCKY” (IMO No. 9402469)

___________________________

BETWEEN
CREDIT SUISSE AG Plaintiff
and
THE OWNER OF THE SHIP OR VESSEL “BRIGHTOIL LUCKY” Defendant

___________________________

HCAJ 15/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 15 OF 2019

Admiralty action in rem against: the ship or vessel “BRIGHTOIL LEGEND” (IMO No. 9398266)

___________________________

BETWEEN
CREDIT SUISSE AG Plaintiff
and
THE OWNER OF THE SHIP OR VESSEL “BRIGHTOIL LEGEND” Defendant

___________________________

HCAJ 16/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 16 OF 2019

Admiralty action in rem against: the ship or vessel “BRIGHTOIL LEAGUE” (IMO No. 9402471)

___________________________

BETWEEN
CREDIT SUISSE AG Plaintiff
and
THE OWNER OF THE SHIP OR VESSEL “BRIGHTOIL LEAGUE” Defendant

___________________________

Before: Hon Anthony Chan J in Court

Date of Defendant’s Written Submissions (HCAJ 13-16/2019): 2 April 2020

Date of Intervener’s Written Submissions (HCAJ 13/2019): 2 April 2020

Date of Caveator’s Written Submissions (HCAJ 15/2019): 2 April 2020

Date of Plaintiff’s Written Submissions (HCAJ 13-16/2019): 3 April 2020

Date of Plaintiff’s Written Reply Submissions: 6 April 2020

Date of Defendant’s Written Reply Submissions: 8 April 2020

Date of Plaintiff’s Further Written Reply Submissions: 8 April 2020

Date of Decision: 16 April 2020

________________

D E C I S I O N

________________

1. These 4 actions involve the same parties[1]. They arose from the enforcement of the Plaintiff’s mortgages over 4 vessels. In each of the 4 actions, the Owner had filed a Notice of Motion on 16 March 2020 for the determination of priorities and payment out of the proceeds of sale of the vessel, which are now before the court.

2. The same teams of lawyers represent the parties in each action, and the Notices of Motion have been dealt with collectively by them. Despite the lack of a formal order for consolidation, it is convenient and consistent with the objectives of expeditious and cost-effective disposal to deal with the Notices of Motion collectively. Hence, this Decision covers all 4 applications.

3. At the invitation of the court, the parties had agreed to the paper disposal of these applications.

4. The 4 actions are very similar in most respects, eg, Order for Judgment on liability and Order for Sale of the vessel were obtained on the same day in each case (26 July 2019), and all the vessels were sold on 21 October 2019. The issues are identical in all the cases. Due to the similarities, it would suffice for the present purpose for the court to deal with the details of the first case, HCAJ 13/2019. The resolution of the issues would apply to all cases. Where it is relevant, the particular feature of the individual case would be identified.

HCAJ 13/2019

5. A brief procedural history may start with the Order for Judgment on liability and Order for Sale of the Vessel, both obtained on 26 July 2019. The Vessel was sold on 21 October 2019 and the proceeds were paid into court. The time for lodgement of claims against the Vessel or the proceeds of sale thereof expired on 20 November 2019. The Plaintiff’s Statement of Claims, Damages & Expenses was only produced on 14 February 2020. There is only 1 remaining caveat against payment out, which was filed by the Intervener who has a marshalling claim as set out in its Statement of Claim filed on 19 March 2020.

6. Somewhat out of the ordinary, the Notice of Motion was taken out on 16 March 2020 by the Owner who was (and is) concerned about the delay in the finalisation of this action which is detrimental to it.

7. The delay is detrimental to the Owner because (i) it is liable to the Plaintiff for interest on penal rates and (ii) there is a balance to be returned to the Owner after satisfaction of all the claims.

8. I am glad to say that the parties have managed to reach consensus on all the terms of the draft Order before the court[2], save for the Plaintiff’s legal costs.

9. On priorities, it is agreed that the Chief Bailiff’s commission on sale and arrest expenses (in the sum of HK$5,866,947.15) be paid as first priority, and the Plaintiff to be paid as second priority on the basis that it holds a first priority mortgage.

10. Agreement has also been reached between the Owner and the Intervener, which is reflected in the draft Order, in that (i) the priority of the Intervener’s claim be reserved for later determination; and (ii) the sum of US$24 million will be retained in court to cover the Intervener’s claim.

11. After meeting the first and second priority payments and the retention of sum for the Intervener’s claim, the balance of the funds in court will be paid to the Owner.

12. In respect of the Plaintiff’s claims, the judgment sum (in excess of US$25 million); interest up to and including 1 April 2020; daily interest thereafter; and enforcement costs have all been agreed.

13. The arguments concern the Plaintiff’s costs. The Owner accepts that the Plaintiff is entitled to costs on indemnity basis, which was reflected in the two Orders of the 26 July 2020.

14. However, the Owner says that the amount of costs claimed by the Plaintiff is unusually large, bearing in mind that similarly large sums of costs are being claimed in each of these actions. The similarities of these cases suggest that the work done was largely repetitive. Therefore, the Owner wants to have the costs taxed if agreement cannot be reached on them. On the other hand, the Owner agrees to the retention of a sum to cover, comfortably, this claim of the Plaintiff (including the costs of taxation) pending agreement or taxation.

15. There is difference between the parties on the amount of retention. The Plaintiff demands US$515,000, whereas the Owner says that US$380,000 is more than sufficient. There is also an argument over the terms of the retention clause to be included in the Order.

16. Firstly, I believe that the Owner’s concern about the sizes of the legal expenses in all 4 cases is not unreasonable. Secondly, the Owner is right that indemnity costs are not without limits, eg, costs unreasonably incurred or of unreasonable amount are not allowed: Hong Kong Civil Procedure 2020, vol 1, [62/App/11].

17. On quantum, the evidence adduced by the Plaintiff is that as at 1 April 2020 the total legal costs incurred for the period from November 2018 to February 2020 is US$266,175.18.

18. It is important to note that such costs embraced not only the costs of this action but covered “further legal fees incurred by the Plaintiff with a view to protect, exercise or enforce its rights under the Mortgage against the Vessel”. Regrettably, the failure by the Plaintiff to separate the costs of this action and such “further legal fees” presents unnecessary complications in this exercise. Indeed, neither the quantum of those fees, nor the purpose for which they were incurred is clear.

19. To see how the sum of US$266,175.18 is built up to US$515,000, I need to go to the Plaintiff’s skeleton submissions. The Plaintiff is asking for additional legal costs:

(i) for March and April 2020 at US$40,000 per month;

(ii) for resolving any...

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