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Smy (Hong Kong) Ltd v The Owners And/or Demise Characters Of The Ship Or Vessel “Shun An”

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date27 February 2014
Year2014
Judgement NumberHCAJ24/2012
Subject MatterAdmiralty Action
CourtHigh Court (Hong Kong)
HCAJ24/2012 SMY (HONG KONG) LTD v. THE OWNERS AND/OR DEMISE CHARACTERS OF THE SHIP OR VESSEL “SHUN AN”

HCAJ 24/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 24 OF 2012

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Admiralty action in rem against the ship or vessel “SHUN AN” (IMO:8307571, previously known as “SHUN TAI”)

BETWEEN
SMY (HONG KONG) LIMITED Plaintiff

and
THE OWNERS AND/OR DEMISE CHARACTERS OF THE SHIP OR VESSEL “SHUN AN” (IMO:8307571, PREVIOUSLY KNOWN AS “SHUN TAI”) Defendants
____________
Before: Hon Au-Yeung J in Chambers
Date of Hearing: 26 February 2014
Date of Decision: 27 February 2014

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D E C I S I O N

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1. The plaintiff issued a writ on 8 February 2012 to seek damages of US$3.33m against the defendant pursuant to a voyage charter arising from the defendant owner’s failure or refusal to release the cargo. This is the 2nd ex parte application for extension of the validity of a writ.

Background

2. The vessel had entered Hong Kong waters on 3 occasions in 2012:

(1) 20 June 2012 (Wednesday) from 5:30pm to 21 June 2012 at 7:08am (for around 14 hours);

(2) 22 March 2012 (Thursday) from 9:54am to 2:13pm (for around 4 hours);

(3) 12 February 2012 (Sunday) from 8:48am to 2:11pm (for about 6 hours).

Despite that, the validity of the writ was renewed for 12 months.

3. The vessel had entered Hong Kong waters on 3 other occasions in 2013:

(4) 22 March 2013 (Friday) from 11:32am to 7:48pm (for around 8 hours);

(5) 6 May 2013 (Monday) from 12:57am to 5:27am (for about 5 hours);

(6) 2/7/2013 (Tuesday) from 3:16pm to 1:49am (for about 10 hours).

4. On 29 January 2014, the plaintiff applied to extend the validity of the writ for another 12 months on the ground that:

A. It was not possible to effect service of the writ on the vessel in 2013 (“the impossibility of service ground”).

5. As I was not inclined to extend the validity of the writ, on 30 January 2014, I directed the plaintiff to appear and make representation.

6. Since my direction, the plaintiff’s solicitor has filed another affirmation, relying further on the grounds that:

B. Withholding of service was for the reason of avoiding unnecessary proceedings and saving costs (“the avoidance of unnecessary proceedings ground”); and

C. There would be prejudice to the plaintiff if the writ is not extended but no prejudice to the defendant (“the prejudice ground”).

7. It transpired that before issue of the writ, the plaintiff had instituted proceedings in the Xiamen Maritime Court of Mainland China and commenced arbitration.

8. In the Xiamen proceedings, the vessel was arrested on 30 December 2011. The owners of the vessel put up security in the form of real property and a guarantee from a real estate company (“the Security”). Despite the objections of the plaintiff, amongst others, that the value of the property was subject to severe fluctuation and the financial position of the real estate company was not at all reliable, the Xiamen Court nevertheless released the vessel on 9 February 2012 against the putting up of the Security.

9. On 4 January 2012, the plaintiff commenced arbitration proceedings against the owners pursuant to the charterparty. The arbitration has been pursued and the parties have just finished discovery.

10. The plaintiff is said to be concerned that the Security might not be sufficient for the plaintiff’s claim in the arbitration proceedings. So it issued the writ with a view to obtaining further security for the plaintiff’s intended claim in case the Security fell sort of its expected value.

The legal principles

11. Order 6 rule 8(2) empowers the court to extend the validity of a writ where there are good reasons to do so. See also Hong Kong Civil Procedure 2014, Vol 1, para 75/3/3.

12. A two-stage test is applied by the court, first to ascertain if there are good reasons for extending time and second to weigh all relevant factors and balance the hardship between the parties before deciding whether the writ should be extended as a matter of discretion: Kleinwort Benson Ltd v Barbrak Ltd [1987] 1 AC 597; Pacific Electric Wire & Cable Co Ltd v Hu Hung Chiu [2011] 1 HKLRD 1000, at para 17.

13. Whether or not there was good reason in a particular case must depend on all the circumstances of that case: Kleinwort Benson Ltd v Barbrak Ltd,at 622H to 623A.

14. No sufficient opportunity to effect service can be a good reason in the first stage. See the Berny principles laid down in the case of The Berny [1979] 1 QB 80, followed in Hong Kong in The Chong Bong [1997] 3 HKC 579, at 590B to E, Waung J:

“In my opinion, when the ground for renewal is, broadly, that it has not been possible to effect service, a plaintiff must, in order to show good and sufficient cause for renewal, establish one or other of three matters as follows: (1) that none of the ships proceeded against in respect of the same claim, whether in one action or more than one action, have been, or will be, present at a place within the jurisdiction during the currency of the writ; alternatively (2) that, if any of the ships have been, or will be, present at a place within the jurisdiction during the currency of the writ, the length or other circumstances of her visit to or stay at such place were not, or will not be, such as to afford reasonable opportunity for effecting service on her and arresting her, alternatively (3) that, if any of the ships have been, or will be, present at a place within the jurisdiction...

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