Jingjin Shipping Co Ltd v The Owners Of The Ship Or Vessel "Tian Xiang 2 Hao" (Prc Flag) And Another

Judgment Date08 October 2003
Subject MatterAdmiralty Action
Judgement NumberHCAJ322/2001
CourtHigh Court (Hong Kong)
HCAJ000322/2001 JINGJIN SHIPPING CO LTD v. THE OWNERS OF THE SHIP OR VESSEL "TIAN XIANG 2 HAO" (PRC FLAG) AND ANOTHER

HCAJ000322/2001

HCAJ 322/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION

ACTION NO. AJ 322 OF 2001

_____________________

Admiralty action in rem against
the ship or vessel "TIAN XIANG 2 HAO" of the PRC flag

BETWEEN:-
JINGJIN SHIPPING CO. LTD. Plaintiffs
AND
(1) THE OWNERS OF THE SHIP OR VESSEL "TIAN XIANG 2 HAO" (PRC FLAG) Defendants
(2) THE DEMISE CHARTERERS OF THE SHIP OR VESSEL "TIAN XIANG 2 HAO" (PRC FLAG)
and
INCE & CO. Intended Intervener

_________________________

Coram: Hon. Reyes J in Court

Date of Hearing: 24 September 2003

Date of Judgment: 8 October 2003

_________________

J U D G M E N T

_________________

1. The Plaintiffs apply by Notice of Motion ("the Motion") dated 3 July 2003 for Orders that:-

(1) the Acknowledgment of Service ("the Acknowledgment") filed herein on 13 December 2001 be struck out or set aside on the ground that Messrs Ince & Co ("Ince"), who filed the Acknowledgment, had no authority to act for the 1st Defendants; and,
(2) the costs of the Plaintiffs' application and all costs incurred by them in consequence of the filing of the Acknowledgment be paid by Ince on a common fund basis.

2. By Summons dated 22 September 2003 the Plaintiffs applied to amend the Motion to include an additional ground for setting aside the Acknowledgment, namely, that the same:-

"does not specify an address for service in Hong Kong following Ince & Co. having ceased to act pursuant to Order of the Court dated 17th May 2003".

I allow the amendment.

Background

3. The Plaintiffs claim indemnity or contribution for loss of or damage to a consignment of 17 containers of newsprint on 20 September 2001. At that time 10 containers fell into the sea after loading on board the ship "TIAN XIANG 2 HAO" ("the vessel"). Seven containers (and their contents) loaded on board the vessel were also found to be damaged.

4. The writ was issued on 13 November 2001 and amended on 15 November 2001. The vessel was arrested in Hong Kong on 4 December 2001.

5. The Affidavit of Philip Mo Wan Yiu leading arrest identified the vessel as the ship in connection with which the claim arose and stated Mr Mo's belief, based on a certificate of registration of ownership of the vessel, that:-

"... the person who would be liable in an action in personam is Guangzhou Salvage who were the registered owners and operators of the Vessel at the time of the incident...."

Mr Mo further deposed that:-

"... at the time when the writ was issued on 13th November 2001 and when the cause of action arose on 20th September 2001, Guangzhou Salvage were the beneficial owners of all the shares in the Vessel...."

6. Ince filed the Acknowledgment on 13 December 2001. Against the words "State the description of the Defendant, as named in the Writ of Summons, by whom or on whose behalf the service of the Writ is being acknowledged", Ince typed the following (corresponding with the description of the 1st Defendant on the writ):-

"(1) THE OWNERS OF THE SHIP OR VESSEL

'TIAN XIANG 2 HAO' (PRC FLAG) Defendant"

The Acknowledgment gave Ince's Hong Kong office as the address for service.

7. In December 2001 negotiations ensued between the Plaintiffs solicitors, Messrs Holman Fenwick & Willan ("HFW"), and Ince on provision of security for release of the vessel. Ince initially conducted such negotiations on the basis that they were acting for the "owners" of the vessel, without specifically naming them. HFW continued to identify the owners as Guangzhou Salvage ("Salvage"), including in a draft letter of undertaking sent to Ince for consideration on 13 December 2001. During this period, HFW pressed for confirmation of the identity of Ince's clients.

8. On 21 December 2001 Ince responded to such inquiries as to its clients as follows:-

"Finally, we find it odd that you keep pressing for the identity of our clients, knowing well that we are instructed by Owners of the arrested vessel. We trust you had done the relevant searches before you applied for the arrest of the vessel. Please let us know what you are after in this regard."

9. By fax dated 22 December 2001 HFW replied:-

"As to your penultimate paragraph, we assume that you have a purpose in repeatedly declining to provide an unequivocal confirmation of the identity of your clients, the owners of the 'Tian Xiang 2 Hao'. You are obliged to provide the identity of your clients to us on the basis of the provisions in Order 81 Rule 4/4 of the Hong Kong White Book. The Registry of the Vessel evidences that the owners of the 'Tian Xiang 2 Hao' are Guangzhou Salvage. Perhaps you should have the privilege if appropriate of denying that Guangzhou Salvage are your clients in this matter. Until you do so, we have no reason to doubt that the ownership as recorded in the registry of the Vessel is correct."

10. On 11 January 2002 Ince faxed HFW, stating:-

"As to the identity of our clients, we confirm that we act for Tian Xiang Warehousing & Transportation Co. Ltd. of Guangzhou who instructed that they are the owners of the vessel Tian Xiang 2..."

By fax of the same date HFW asked Ince for a copy of an ownership registration certificate evidencing Tian Xiang Warehousing & Transportation Co. Ltd. ("Warehouse") "as the owners of the vessel at the material time".

11. On 30 January 2002 HFW filed a Statement of Claim.

12. Although no certificate of the type requested by HFW on 11 January 2002 has ever been produced, on 5 February 2002 Ince wrote to HFW:-

"So far as ownership of the vessel is concerned, we confirm that there has been no change of ownership since the incident on 20 September 2001 and that at all material time, our client Guangzhou Tian Xiang Warehousing and Transportation Co. Ltd. was the owner of the Tian Xiang 2. As requested, we now attach a copy of the agreement between our client and Guangzhou Salvage Association showing that our client is the true owner of the vessel who is in charge of its day-to-day operation."

Enclosed with its letter, Ince sent copies of 2 Chinese agreements:-

(1) an Agreement for Agency of the Vessel ("the Agency Agreement") dated 27 July 1999; and,
(2) a Contract for Employment of Seafarers ("the Employment Contract") dated 12 August 1999.

13. The Agency Agreement provided (among other terms) as follows (in translation1):-

(1) (Recital) "Guangzhou Huangpu Tian Xiang Warehousing and Transportation Company Limited (hereinafter 'Party A') and Guangzhou Maritime Rescue and Salvage Bureau (hereinafter 'Party B') contract for the vessel's agency of the Vessel in the following terms:-...."
(2) (Clause 1) "Party A agree to place its MV 'Tian Xiang 2 Hao' in the agency of Party B and shall pay the agency fees as according to this agreement. Party B agrees to manage Party A's Vessel and perform the agency obligations as according to this agreement."
(3) (Clause 4)
"Party A's Liabilities
(i) Responsible for the vessel's transportation and agency arrangement and dispatch; and ensuring the Vessel is used for the purposes of legitimate transportation of cargoes for the routes between the People's Republic of China, Hong Kong and Macau.
(ii) Responsible for payment of the operating costs (e.g. fuel charges, lubricant oil charges, expenses for the necessities of the seafarers and engine room and port charges etc.), repair costs in ensuring the seaworthiness of the vessel and other maintenance charges, insurance premiums of the vessel, regular inspection and other expenses related to the vessel;
(iii) Render the agency fees in full to Party B punctually;
(iv) Render agency transportation charges for the vessel, computed on the basis of turnover as according to the government's regulation, and other related charges;
(v) Provide the agent with the actual status and circumstances of the vessel and related diagrams and particulars; and
(v) In Party A entrusting Party B to manage the 'Tian Xiang 2 Hao', Party B's crew must be employed to work on board the 'Tian Xiang 2 Hao', failing which Party B would be entitled to withdraw all the certificates of the vessel."
(4) (Clause 5)
"Party B's Liabilities
(i) Responsible for arranging approvals in relation to the vessel's seaworthiness whilst running in the routes between Pearl River Delta and Hong Kong and Macau.
(ii) Assisting Party A to arrange replenishing and acquiring of the nec(ii)essary fuel, lubricants, material and accessory items necessary to the vessel while on voyage."
(5) (Clause 7)
"Liabilities for breach of contract
(A) Party A's liabilities for breach of contract
(i) Party A shall be liable for all unsatisfactory consequences caused by Party A's breaches of Clause 4 of this Agreement;
(ii) Party A shall be responsible for all losses caused by the detention of the vessel resulting from Party A's delay or refusal to pay any of the charges listed in this Agreement;
(iii) Party B shall be entitled to 'damages for breach of contract' equal to 5/1000 the sum owed per day [in] the event that Party A has failed to render full management charges punctually.
...

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