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Hai Soon International Trading PTE Ltd v Owners of the Motor Vessel Yin Chen No 1 [2010] FJHC 474; HBG05.2008 (15 October 2010)

IN THE HIGH COURT OF FIJI
AT SUVA
ADMIRALTY JURISDICTION


CASE NUMBER: HBG: 5 OF 2008


BETWEEN:


HAI SOON INTERNATIONAL TRADING PTE LIMITED
PLAINTIFF


AND:


THE OWNERS OF THE MOTOR VESSEL YIN CHEN NO. 1
DEFENDANT


AND:


TSAI WAN LIU
1ST INTERVENER


AND:


CONSOLIDATION ENTERPRISES LIMITED
2ND INTERVENER


AND:


TUNA FISHING (VANUATU) CO. LTD
3RD INTERVENER


AND:


FIJI ISLANDS REVENUE AND CUSTOMS AUTHORITY
PROPOSED 4TH INTERVENER


Appearances: Mr. Mohammed Saneem for the Plaintiff. .
Ms. Renee Lal for the 1st and 2nd Intervener.
Mr. S. Valenitabua for the 4th Intervener.
Ms. T. Rayawa for the proposed 4th Intervener.
Date/Place of Hearing: Tuesday, 24th August, 2010 at Suva.
Date/Place of Judgment: Friday, 15th October, 2010 at Suva.
Judgment of: The Hon. Justice Anjala Wati.


JUDGMENT


ADMIRALTY JURISDICTION – Vessel "Yin Chen No. 1" arrested by an order of the court and subsequently sold - judgment for the plaintiff and 1st intervener obtained in default after arrest - Further application for intervention was made by 2nd and 3rd defendant - Vessel sold by an order of the court on the understanding that any customs duty must not be included in the sale price; the consent order for sale was specifically made on that basis -subsequent application by FIRCA to intervene and stop payment to all parties and for payment to be made to FIRCA as the first pay out on grounds that statutory debt is due and owing- application refused on the basis that the effect of arrest is to adjudicate and satisfy the claimants claim and the proceeds are not affected by the subsequent claims of any party after the arrest is made-the order also refused on the basis that the parties had specifically consented to the sale to exclude the duty as claimed by FIRCA and if the duty was to be included then the parties would have looked for a tender higher then the current purchasers tender to include the duty-delay by FIRCA to feature in proceedings must not jeopardise the current claimants - further, an order also refused on the basis that FIRCA could not have brought an action in rem or in personam in the first place and to allow FIRCA to now claim the proceeds of the sale defeats the purpose of the in rem and in personam jurisdiction-application refused with no order as to costs.
_____________
Legislation
High Court Act Cap. 13.
High Court (Admiralty Rules) Cap. 13.
Admiralty Jurisdiction (Fiji) Order in Council, 1962.
Administration of Justice Act, 1956.
________________________________
Cases / Texts Referred To:
The "Cella" [1888] UKLawRpPro 18; (1888) 13 P.D. 82 (C.A.).
The "Lord Strathcona" [1925] P. 143.
The "Gulf Venture" [1985] 1 Lloyd's Rep. 131.
The "Santa Anna" [1980] Lloyd's Rep. 180.
The "Pan Oak" [1992] 2 Lloyd's Rep. 36.
The "Acrux" [1961] 1 Lloyd's Rep. 471.
The "Dowthorpe", (1843) 2 Wm. Rob.73.
The "Byzantium", (1992) 16 ASB. 19.
The "Sea Spray" [1907] UKLawRpPro 4; [1907] P. 133.
The "Ousel" [1957] 1 Lloyd's Rep. 151.
The "Queen of the South" [1968] P. 449.
The "Regina del Mare" (1864) Br. & L. 135.
Brown v. The "Flora" (1898) 6 Ex. C. R. 133.
"St. Merriel" [1963] P. 247.
The "Ocean Jude" [1992] L.M.L.N. 322.
Meeson, N; "Admiralty Jurisdiction and Practice"; Volume 1; London; 1993.


The Application

  1. Fiji Islands Revenue and Customs Authority ("FIRCA") has filed an application seeking an order that FIRCA be joined as a party in the current proceedings and that the customs duty be paid out to FIRCA from the proceeds of the sale of the vessel Yin Chen No. 1.

The Grounds

  1. Mr. Manikam Govind, the Acting Manager of Customs Investigation Branch deposed an affidavit based on which the orders are sought. Mr. Govind made the following contentions:-
    1. FIRCA only became aware of the sale of the vessel as a result of the correspondence sent to it by one of the interveners to the proceedings.
    2. The Vessel Yin Chen No. 1 is a foreign fishing vessel registered in Taiwan. Its last arrival in Fiji was on the 1st day of August, 2008. Under the Customs law duty is payable on all goods imported into Fiji at the rates and in the circumstances specified in the Customs Tariff Act, 1996. Import is defined under the customs law as to bring or cause to bring; the vessel is therefore subject to duty.
    1. The duty in respect of the said vessel is $39, 191.88.

The Opposition


  1. All the parties to the proceedings opposed the application. Neither party filed an affidavit. The opposition was made on the basis that the parties had consented to the sale on the grounds that the sale price was exclusive of any charges including the customs duty. Had the duty been included the parties would not have consented to the sale at the price but would have asked for fresh tenders to be called to ascertain a higher value to include the duty that was to be payable.

The Issues


  1. There is one simple issue before the court for determination and that is whether the customs duty should be paid from the proceeds of the sale?

The Law and Determination of the Issue


  1. I think I must first resolve the question of my powers to hear a claim for title to proceeds of the sale of the res in court. Though this was not raised by any party to the proceeding, I must first satisfy my self that I have the jurisdiction to hear the claim.
  2. Order 4 Rule 4 of the High Court (Admiralty Rules) Cap. 13 states that " in an admiralty action in rem any person not named in the writ may intervene and appear on filing an affidavit showing that he is interested in the res under arrest or in the fund in the registry".

[underlining is mine]


  1. The Admiralty Jurisdiction (Fiji) Order in Council, 1962 came in operation on the 27th day of February, 1962. Article 3 states that the "Provisions of sections 3, 4, 6, 7 and 8 of Part I of the Administration of Justice Act, 1956, shall extend to Fiji with adaptations and modifications that are specified in Column II of the Second Schedule".
  2. The relevant applicable section of the Administration of Justice Act, 1956 that determines the jurisdiction to hear claims for title to proceeds in court is s. 3 (7) which with adaptations and modifications reads as "where, in the exercise of its Admiralty jurisdiction, the High Court of Fiji orders any ship, aircraft or other property to be sold, the court shall have jurisdiction to hear and determine any question arising as to the title to proceeds of sale".

[underlining is mine]

  1. I am satisfied by virtue of Order 4 Rule 4 of the High Court (Admiralty Rules) Cap. 13 and 3 (7) of the Administration of Justice Act, 1956 that I have the jurisdiction to hear FIRCA's claim for the proceeds. Based on the provisions I had allowed FIRCA and the other parties to makes submissions as to FIRCA's entitlement over the proceeds as a first payout. No concrete submissions have been made by any party and the matter was just left to the court for its determination. Neither party has assisted the court on any point of law at all.
  2. I must now deal with the only issue in the matter, FIRCA's claim for first pay out to be made to it from the proceeds of the sale. My discussion in the judgment will indicate that FIRCA's claim must be dismissed on three grounds, first on the grounds of laches leading to conditional sale, second and also in the alternative on the grounds of the effect of arrest excluding FIRCA's right to claim the sale proceeds and thirdly on the grounds that the subject matter could not have been brought as an action in rem or in personam in the first place.

LACHES AND CONDITIONAL SALE

  1. All the parties to the proceedings except FIRCA had appeared in court on the day the plaintiff had made an application for sale of the vessel. FIRCA was then not a party to the action. All the parties had consented to the sale of the vessel to the current buyer. FIRCA's non intervention at any stage of the proceedings created confusion as whether or not FIRCA was interested in claiming the Customs Duty. To safeguard their respective interests, the parties entered into a conditional sale. The sale was to be on the condition of an "as is where is" basis and also exclusive of any Customs Duty from the sale price.
  2. If the customs duty was to be included in the proceeds of the sale or paid from the proceeds of the sale, neither party would have consented to the sale at such a price. The parties would have fetched a buyer who would have paid a purchase price including the proposed duty.
  3. FIRCA has delayed in featuring in the proceedings to file a caveat against release of the ship or against payment of the proceeds of the sale or even an application to intervene in the proceedings. I would have expected FIRCA to have featured in the proceedings at the time the arrest was made. It would have been aware or should have been aware of the arrest which was made in 2008. It is inconceivable that the Customs Officers did not know of the arrest since 2008, of a ship which was continuously berthed at the wharf for the past 2 years. The delay by FIRCA led the parties to enter into a conditional sale to safeguard the claimants' interests. The delay is FIRCA's making and they cannot now oppose payment out to the parties at this stage. Its claim if any from the proceeds of the conditional sale should be discharged by laches. It would be highly prejudicial to the existing claimants if FIRCA's claim were entertained at this late stage.

EFFECT OF ARREST

  1. The order for arrest of the vessel was made by his Lordship the Hon. Mr. Justice Singh on the 6th day of August, 2008. Subsequently there were two judgments entered against the defendant, one on the 24th day of September, 2008 in favour of the plaintiff in the sum of USD 197, 342.60 and second in favour of the 1st intervener in the sum of $388,734.98 entered on the 19th day of September, 2008.
  2. In this matter FIRCA's claim arose (if any, although not adjudicated upon) after the arrest. The moment that the arrest took place, the ship was held by the court as security for whatever may be adjudged by it due to the claimants. The ship was the security to answer the judgment and unaffected by events which happens between the arrest and the judgment. The ship was held to abide the result in action and the rights of the parties determined by the state of things at the time of the institution of the action and cannot be affected by anything which takes places subsequently.
  3. The case of The "Cella" [1888] UKLawRpPro 18; (1888) 13 P.D. 82 (C.A.). discusses the effect of an arrest. This ship was arrested in respect of a claim for repairs which did not carry a maritime lien. Subsequently the shipowners were ordered to be wound up and the liquidator claimed the proceeds of sale of the ships in the hands of the court as against the plaintiff. It was held by the Court of Appeal that the liquidator could not oppose payment out to the plaintiff. Lord Esher M.R said at page 87: "the moment that the arrest takes place, the ship is held by the Court as a security for whatever may be adjudged by it to be due to the claimant"; and Lord Justice Fry said at page 88: "The arrest enables the Court to keep the property as security to answer the judgment, and unaffected by chance events which may happen between the arrest and the judgment"; and Lord Justice Lopes said at page 88 as well: "From the moment of the arrest the ship is held by the court to abide the result in the action, and the rights of the parties must be determined by the state of things at the time of the institution of the action, and cannot be altered by anything which takes place subsequently."
  4. I must re-iterate that this delay by FIRCA has caused the parties to just take into account the existing claimants' interest to agree to a sale. Any additional claim now would be prejudicial to the claimants and must be refused.

ACTION UNDER ADMIRALTY JURISDICTION

  1. The right of an intervener who has intervened is limited to the protection of his interest in the res and the court will not permit him to raise extraneous issues: The "Lord Strathcona" [1925] P. 143 (Hill J.).
  2. There is not limit to the category of person who may have an interest in the property under arrest or the proceeds of sale, but the following are examples of the type of persons who have been permitted to intervene:
  3. I have examined few of the cases in which intervention has been allowed and upon analysis of the same, it is my judgment that intervention by those claimants would be allowed if they initially could have brought an action in rem or in personam. If this proposition was not applied then the danger is that anyone who could not bring an action in rem or in personam in the first place could claim the proceeds of the sale which effectively could be open for claim to the world at large. The purpose therefore of confining the jurisdiction in rem and in personam would be defeated.
  4. Let me closely examine whether FIRCA had a right to make a claim in rem or in personam in the first place, in other words, whether FIRCA could have brought its claim for outstanding duty under the Admiralty Jurisdiction of this Court.
  5. The Admiralty Jurisdiction of the High Court of Fiji is derived from section 21 of the High Court Act Cap. 13 which reads as follows:-

"The Supreme Court (now High Court) shall be a Colonial Court of Admiralty within the meaning of the Colonial Courts of Admiralty Act, 1890, of the United Kingdom, and shall have and exercise such Admiralty Jurisdiction as is provided under or in pursuance of subsection (2) of section 56 of the Administration of Justice Act, 1956 of the United Kingdom or as may be from time to time be provided by any Act, but otherwise without limitation, territorially or otherwise."


  1. Article 2 of the Admiralty Jurisdiction (Fiji) Order in Council, 1962 states:-

"The Colonial Courts of Admiralty Act, 1890, shall, in relation to the Supreme Court of Fiji, have effect as if for the reference in subsection (2) of section 2 thereof to the Admiralty jurisdiction of the High Court in England there were substituted a reference to the Admiralty Jurisdiction of that court as defined by section 1 of the Administration of Justice Act, 1956, subject to the adaptation and modification of the said section 1 that is specified in the First Schedule".


  1. Section 1(1) of the Administration of Justice Act, 1956 provides:-

"The Admiralty Jurisdiction of the High Court of Fiji shall be as follows, that is to say, jurisdiction to hear and determine any of the following questions or claims-


"(a) Any claim to the possession or ownership of a ship or to the ownership of any share therein;


(b) Any question arising between the co-owners of a ship as to possession, employment or earnings of that ship;

(c) Any claim in respect of a mortgage of or charge on a ship or any share therein;

(d) Any claim for damage done by a ship;

(e) Any claim for damage received by a ship;

(f) Any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or of the wrongful act, neglect or default of the owners, charterers or persons in possession or control of a ship or of the master or crew thereof or of any other person for whose wrongful acts, neglects or defaults the owners, charterers or persons in possession or control of a ship are responsible, being an act, neglect or default in the navigation or management of the ship, in the loading, carriage or discharge of goods on, in or from the ship or in the embarkation, carriage or disembarkation of persons on, in or from the ship;

(g) Any claim for loss of or damage to goods carried in a ship;

(h) Any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship;

(i) Any claim in the nature of salvage (including any claim arising by virtue of the application, by or under section fifty-one of the Civil Aviation Act, 1949, of the law relating to salvage to aircraft and their apparel and cargo);

(j) Any claim in the nature of towage in respect of a ship or an aircraft;

(k) Any claim in the nature of pilotage in respect of a ship or an aircraft;

(l) Any claim in respect of goods or materials supplied to a ship for her operation or maintenance;

(m) Any claim in respect of the construction, repair or equipment of a ship or dock charges or dues;

(n) Any claim by a master or member of the crew of a ship for wages, and any claim by or in respect of a master or member of the crew of a ship for any money or property which, under any of the provisions of the Merchant Shipping Acts, 1894 to 1954, is recoverable as wages or in the court and in the manner in which wages may be recovered;

(o) Any claim by a master, shipper, charterer or agent in respect of disbursements made on account of a ship;

(p) Any claim arising out of an act which is or is claimed to be a general average act;

(q) Any claim arising out of bottomry;

(r) Any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, in a ship, or for the restoration of a ship or any such goods after seizure, or for droits of Admiralty,

Together with any other jurisdiction which either was vested in the High Court of Admiralty immediately before the date of the commencement of the Supreme Court of Judicature Act, 1873 (that is to say, the first day of November, eighteen hundred and seventy-five) or is conferred by or under an Act which came into operation on or after that date on the High Court as being a court with Admiralty jurisdiction and any other jurisdiction connected with ships or aircraft vested in the High Court apart from this section which is for the time being assigned by rules of court to the Probate, Divorce and Admiralty Division.


The jurisdiction of the High Court under paragraph (b) of subsection (1) of this section includes power to settle any account outstanding and unsettled between the parties in relation to the ship, and to direct that the ship, or any share thereof, shall be sold, and to make such other order as the court thinks fit.


The reference in paragraph (i) of subsection (I) of this section to claims in the nature of salvage includes a reference to such claims for services rendered in saving life from a ship or an aircraft or in preserving cargo, apparel or wreck as, under sections five hundred and forty-four to five hundred and forty-six of the Merchant Shipping Act, 1894, or any Order in Council made under section fifty-one of the Civil Aviation Act, 1949, are authorized to be made in connection with a ship or an aircraft.


The preceding provisions of this section apply __


(a) in relation to all ships or aircraft, whether British or not and whether registered or not and wherever the residence or domicile of their owners may be;

(b) in relation to all claims, whosoever arising (including, in the case of cargo or wreck salvage, claims in respect of cargo or wreck found on land); and

(c) so far as they relate to mortgages and charges, to all mortgages or charges, whether registered or not and whether legal or equitable, including mortgages and charges created under foreign law:

Provided that nothing in this subsection shall be construed as extending the cases in which money or property is recoverable under any of the provisions of the Merchant Shipping Acts, 1894 to 1954".


[Underlining is mine for emphasis]


  1. The only possible head under which FIRCA could have brought an action under the admiralty jurisdiction was under the second limb of section 1 (1) (c) of the Administration of Justice Act, 1956.
  2. Is Customs Duty a "charge upon the ship"? I think that the term charge used in the context does not include a claim such as the duty that FIRCA is claiming. Customs duty maybe a claim arising in connection with the ship but not a charge upon the ship. The term "charge", must be, as indicated in the section be a 'charge upon a ship" and not any claim arising in "connection with the ship".
  3. The term "charge" is not defined in the Administration of Justice Act, 1956. The various case authorities do define the term charge and will assist me in this matter.
  4. A charge is the appropriation of property to meet a debt and is distinguished from a mortgage in that no property passes to the chargee: Meeson, N; "Admiralty Jurisdiction and Practice"; Volume 1; London; 1993.
  5. In the "St. Merriel" [1963] P. 247 it was held that "other charge" within the equivalent section of the 1956 Act meant no more than the words "charge upon a ship" in the Merchant Shipping Acts, and did not include a possessory lien for repairs. Mr Justice Hewson said at pages 251-252, "'Other charge' obviously is meant to refer to something which, though not within the restricted definition of maritime lien, is nevertheless not as wide as 'any claim arising in connection with a ship'. Manifestly it does not refer to charges in the nature of a mortgage, because they are specifically dealt with in section 3(2)." After considering the arguments put forward by counsel, and after referring to section 513(2) of the Merchant Shipping Act 1894 and section 35(2) and 42 of the Merchant Shipping Act 1906 he went on to say:

"It will be seen, therefore, that although 'charge' is not defined in the Administration of Justice Act 1956, there exist in shipping statutes the very words, 'a charge upon the ship'. In the absence of any direct words by the legislature which enlarge the meaning of 'other charge' I am not disposed to extend its meaning beyond the words I find in the Merchant Shipping Acts to which I have been referred. Though I have much sympathy with the argument put forward so powerfully by Mr Willmer, I am not satisfied that the holder of a possessory lien has been put by this statute into such a position that his rights and his remedies amount to a charge upon the ship for the amount claimed. They certainly amount to an inconvenience, but as I say, in the absence of express words such as 'other charge or right to possession by the holder of a possessory lien'. I am not disposed to extend the meaning further than I have indicated. 'Other charge' seems to me to have some meaning based upon other statutes dealing with merchant shipping"


  1. In The "Ocean Jude" [1992] L.M.L.N. 322 (Karthigesu J. ). the High Court of Singapore held that cargo could not be proceeded against in rem in respect of a claim for freight, and that the shipowners' possessory lien on cargo did not amount to a "charge" within the meaning of section 4(3) of the Singapore High Court Admiralty Jurisdiction Act.
  2. In The "Acrux" [1965] P. 391 Mr. Justice Hewson considered a wider meaning could be given to the word "charge" so as to include a charge given on a vessel under foreign law to secure a claim similar to those recognized by the English court as giving rise to a maritime lien. He said:

"Section 3(3) was considered in the 'St. Merriel' and there I found that the expression 'other charge' was meant to refer to something which, though not within the restricted definition of a maritime lien, was, nevertheless, not as wide as any claim arising in connection with a ship. In that case, the court was dealing with the right of the holder of a possessory lien under English law and it was not necessary to look at foreign law. Obviously section 3(3) does not refer to charges in the nature of a mortgage because they are already dealt with under section 3(2). 'Other charges' means any charge on a vessel given under the law of any nation to secure claims similar to those recognized by this court as carrying a maritime lien such as wages, damage, salvage and bottomry. The categories of maritime lien as recognized by this court cannot, in my view, be extended except by the legislature."


  1. My analysis of the cases indicate that FIRCA's claim could not be brought as an action under the admiralty jurisdiction and thus the application by FIRCA now is an exercise in futility.

Costs


  1. Neither party filed any papers opposing the application. No written or oral submissions were made. No time was consumed in hearing the case and therefore an order against FIRCA for costs is not justified. I shall order each party to bear its own costs.

Final Orders


  1. The application by FIRCA to intervene and be paid out of the proceeds of the sale in court is dismissed.
  2. I will hear the existing parties' application for distribution of funds in due course.
  3. Each party to bear their own costs.

ANJALA WATI
Judge
15.10.2010
_______________________________________


To:


  1. Neel Shivam Lawyers, Solicitors for the plaintiff.
  2. Jamnadas & Associates, Solicitors for 1st and 2nd Intervener.
  3. Sherani & Company, Solicitors for 3rd Intervener.
  4. Ms. Rayawa, counsel for FIRCA, proposed 4th Intervener.
  5. File: Case Number HBG 5 of 2008.

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