Asl Bulk Marine Limited v Owners or Demise Charterers of the Ship or Vessel Stingray (WA-27NCC-1-01/2024)

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1 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA (COMMERCIAL DIVISION) ADMIRALTY IN REM NO.: WA-27NCC-1-01/2024 TINDAKAN ADMIRALTI IN REM TERHADAP KAPAL ATAU VESEL “STINGRAY” (kini dikenali sebagai “BLUERAY”) (IMO NO: 9505871) DARIPADA PELABUHAN LIBERIA BETWEEN ASL BULK MARINE LIMITED (REG. SAR HONG KONG NO. 73794737) … PLAINTIFF AND PEMUNYA DAN/ATAU PENCARTER DEMIS KAPAL ATAU VESEL “STINGRAY” (IMO No. 9505871) DARIPADA PELABUHAN LIBERIA (kini dikenali sebagai “BLUERAY” IMO NO. 9505871) DARIPADA PELABUHAN LIBERIA) … DEFENDANT AND GLADYS HOLDINGS INC. (CO. REG. NO. LIBERIA: C-83897) … INTERVENER

Preamble

pursuant to the leave of the Court granted on 29.5.2024. Until then, for the purpose of negotiations for any alternative security by way of payment into court through a Solicitors Agreement for the release of Vessel pursuant to Order 70 Rule 33 of the ROC 2012, the Plaintiff contended that it was not obliged to engage with Gladys at all in respect of the negotiation on alternative security. Court’s Considerations [28] Where a plaintiff who has arrested a vessel has unreasonably refused to accept offers for alternative security made by the vessel's owner or interested party, such refusal may have legal and financial implications. If the offers are deemed fair and sufficient, the plaintiff faces the risks of liability for wrongful arrest or excessive damages caused by the resulting prolonged detention. [29] In this case, Gladys had made an offer to the Plaintiff an alternative security for the amount stated in the Plaintiff’s Supplementary Affidavit Leading to the Warrant of Arrest. In other words, Gladys’ offer of security was an adequate and effective security in the circumstances of the case. On the face of this offer, it would seem that the Plaintiff’s refusal to accept the offer was unreasonable. [30] However, at the time when the cause of action arose and at the time of filing of the Writ in Rem, Nostalgia was the registered owner of the Vessel or in possession or in control of the Vessel and also the beneficial owner of the Vessel as respect all the shares in the Vessel. Nostalgia was also the party liable in personam to the Plaintiff in respect of the Plaintiff’s claim for breach of the Charterparty in the London Arbitration. [31] Notwithstanding the change of ownership of the Vessel to Gladys on 4.2.2024, it is a well-established principle of admiralty law and practice that the Plaintiff’s statutory right in rem (statutory lien) for its claim against the Vessel survives the change of ownership of the Vessel after the issuance of Writ in rem in this action. [See: ED & F Man Ship Ltd v Heng Holdings SEA (Pte) Ltd [1998] 2 SLR(R) 630; The ‘Bolbina’ [1994] 1 SLR 554] [32] In this case, the Plaintiff’s claim is against Nostalgia whom the Plaintiff contends to be the person liable in personam under the Charterparty and who was at the time the cause of action arose and the when the action in rem was filed, the beneficial owner of the Vessel. In other words, Nostalgia was the ‘relevant person’ under section 21(4) of the United Kingdom Senior Courts Act 1981 (“the UK SCA 1981”). [33] As the owners of the property proceeded or the Vessel’s owners in this Admiralty Writ in rem action, only Nostalgia being the party legally liable for the Plaintiff’s claims would be entitled to enter appearance as of right. [34] The test to determine whether a person can be a proper defendant in an action in rem is to consider if that person would be liable for the plaintiff’s claim should the plaintiff succeed in the action. Not anyone can jump in as a defendant in an in rem action. If there is a change of ownership of the ship between the date of issuance of writ and the service thereof, the new owner is certainly ‘a person interested’ in the ship, but he may not wish to satisfy the claim. The correct procedure is for those who were the owners liable in personam when the writ was issued to enter appearance. The new owners (who would not be liable in personam to the Plaintiff’s claim) should make an application under Order 70 Rules 16 of the ROC 2012 for leave to intervene in the action. [See: Wei Hsing Food (S) Pte Ltd v The Owners or Demise Charterers of the Ship or Vessel ‘The Neptune’ [2005] 5 MLJ 702; The ‘Echo Star’ Ex ‘Gas Infinity’ [2020] SGHC 200; Rei Management Sdn Bhd v The ‘Awana Salvage’ [2021] 1 LNS 2486]. [35] It is important that this procedure is followed so that the Courts may know the facts and the plaintiffs may be under no illusions as to the status of the new owners. Accordingly, Gladys as the new owner of the Vessel and not being the “relevant person” under section 21(4) of the UK SCA 1981 did not have legal capacity to enter a Memorandum of Appearance as of right as the Defendant in this action on 9.5.2024. [36] Instead, as a person interested in the Vessel, being the new owner, Gladys ought to have obtained leave of this Court to intervene and after obtaining leave, Gladys could then appear as an intervener. Persons against whom no claim is made ought not to be described as or included as a defendant to the action. [37] The aforesaid was the reason why after Gladys entered its Memorandum of Appearance as a Defendant, this was challenged by the Plaintiff. From the inception, Gladys was never a proper party to the Admiralty in Rem herein. Gladys was not the real or proper Defendant to this in rem action. [38] In fact, Gladys was not even a proper Intervener (with proper submission to the jurisdiction of the High Court) in the action except and until after it had entered an appearance as Intervener with the leave of the Court granted on 29.5.2024 pursuant to its application vide Enclosure 36. [39] Gladys had no right to enter an appearance as of right as a Defendant in this in rem action on 9.5.2024. Thus, the Plaintiff rightly applied vide Enclosure 25 for an order to set aside Gladys’ Memorandum of Appearance, which it had wrongly entered as a Defendant in this action. [40] Quite clearly, it was consequent to the challenge by the Plaintiff vide Enclosure 25 that Gladys realized that it is not the relevant person under section 21(4) of the UK SCA 1981and that the Memorandum of Appearance which it had entered as Defendant in the action was wrongful and liable to be set aside. [41] This prompted Gladys (as a Defendant who had already entered an appearance in the action and now as proposed Intervener) to then unilaterally take out an ex-parte Notice of Application dated 16.5.2023 vide Enclosure 27 principally for leave of Court to intervene in the action under Order 70 Rule 16 of the ROC 2012. However, at this juncture, Gladys did not seek leave of Court in Enclosure 27 to withdraw the Memorandum of Appearance that it had previously entered as a Defendant in the action. This means that Gladys was seeking leave to intervene whilst it had remained as the Defendant to the action. (For completeness, Gladys ex-parte application vide Enclosure 27 and its solicitor’s Affidavit in Support of Laura affirmed on 16.5.2024 were also not served on the Plaintiff’s Malaysian solicitors on record) [42] Without first seeking the leave of this Court or the consent from the Plaintiff to withdraw the previous Memorandum of Appearance dated 9.5.2024 pursuant to Order 21 Rule 1 of the ROC 2012, the application in Enclosure 27 for leave to intervene whilst remaining as a Defendant was, with respect, improper and embarrassing. [43] It is implicit that, under Order 70 Rule 16 of ROC 2012 that a party who had entered an appearance as a Defendant as of right in the action in rem cannot at the same time apply to Court to also become an intervener in the same action. Moreover, not only was the Memorandum of Appearance which was wrongly entered had not been withdrawn with the leave of Court prior to the filing of Enclosure 27, the Plaintiff’s application in Enclosure 25 to challenge Gladys’ entry of appearance as Defendant as of right was still pending and yet to be determined by this Court. [44] Indeed, having already entered an appearance purportedly as a Defendant in this action, Gladys as the then proposed Intervener could not at the same time apply for leave to intervene in this in rem action under Order 70 Rule 16 of the ROC 2012 without first obtaining leave of Court to withdraw its erroneous Memorandum of Appearance. [45] Given the circumstances above, both Gladys (as proposed Intervener) and its solicitors had arguably no legal standing nor proper submission to the jurisdiction of the Malaysian Courts in this action. This gave rise to a legitimate concern by the Plaintiff that any dealing by the Plaintiff or its solicitors with Gladys without Gladys’ proper submission to the jurisdiction of the High Court may render any steps taken in the proceedings including forging a formal agreement between solicitors in the in rem action to secure the release of Vessel from arrest by way of an alternative security by way of payment into court through Solicitors’ Agreement under Order 70 Rule 33 of the ROC 2012 to be potentially improper or a nullity. [46] Accordingly, for the purpose of negotiations for any alternative security by way of payment into court through a Solicitors Agreement for the release of Vessel, it is my judgment that the Plaintiff was perfectly entitled to refuse to engage with Gladys during the period from 9.5.2024 to 29.5.2024. [47] As alluded to above, whilst pending hearing of Gladys’ application to intervene under Enclosure 27 and without withdrawing the said application, Gladys then filed another fresh Notice of Application dated 27.5.2024 vide Enclosure 36 seeking, inter alia, to withdraw the Memorandum of Appearance filed, for leave to intervene in the action and for Gladys to provide security in the form of payment into Court for the release of the Vessel. [48] Enclosure 36 was really to regularize the procedural and jurisdictional issues arising from the earlier mis-steps made. It was also an application where the issue of alternative security was formally moved before this Court for determination. [49] It was only on 29.5.2024 that this Court allowed Gladys (as proposed Intervener) to withdraw its Memorandum of Appearance as a Defendant and granted permission for Gladys (as proposed Intervener) to enter an appearance in the action as an Intervener. [50] Significantly, the Court further directed on 29.5.2024 that the Plaintiff was to file an Affidavit in Reply to Glady’s Affidavit in Support with regard to Gladys’ prayer to provide alternative security for release of the Vessel by way of payment into court. [51] Clearly, from the above facts, the Plaintiff cannot be said to have prolonged the arrest or cause unreasonable delay in the release of the Vessel as alleged because the Plaintiff was not only entitled in law to file an affidavit in opposition to Gladys’ application for security but both Plaintiff and Gladys had intended a proper determination by this Court on the issue as to whether the Plaintiff was within its rights to obtain the best alternative security or it must accept Gladys’s alternative security as the proposed Solicitors Agreement pursuant to Order 70 Rule 33 of the ROC 2012. [52] Quite apart from the above, it is not insignificant that the Plaintiff’s London solicitors, Messrs. MFB Solicitors, from the inception were already dealing with Nostalgia’s London Solicitors Messrs. Preston Turnbull LLP since December 2023 and subsequent to the arrest of the Vessel by this Court for the provision of alternative security, for the Plaintiff’s London Arbitration claim. [53] The private negotiations between the Plaintiff and Nostalgia’s London solicitors for the provision of alternative security in lieu of arrest of Nostalgia’s Vessel by way of Escrow Agreement had been ongoing way before the Vessel was arrested in this action. These private negotiations (which was agreed in principle by way of Escrow Agreement except the final wordings) had continued between the Plaintiff and Nostalgia’s London Solicitors even after the Vessel was arrested in this action. [54] With the private negotiations between the Plaintiff and Nostalgia’s London solicitors actively ongoing, it was reasonable or justified on the part of the Plaintiff not to deal with Gladys in the negotiations for any alternative security by way of payment into court through a Solicitors Agreement for the release of Vessel at any time before 29.5.2024. Further, the Plaintiff had no obligation to deal with Gladys with regard to its proposed Solicitors Agreement when it lacked legal capacity in the action until such time it submitted to the jurisdiction of this Court by entry of appearance as an Intervener in the action with the leave of the Court. [55] Finally, the Plaintiff had entered into a Tripartite Escrow Agreement on 30.5.2024 with Nostalgia and Gladys. In this regard, Gladys at no time objected to the Plaintiff and Nostalgia entering into the Tripartite Escrow Agreement for the purpose of alternative security for the release of the Vessel. [56] The Tripartite Escrow Agreement constitutes a private security arrangement with regard to satisfaction of Plaintiff’s claim in the London Arbitration and the release of the Vessel from arrest in this action, of which the in rem action was commenced solely as security arrest for the London Arbitration between the Plaintiff and Nostalgia. [57] With the execution of the Tripartite Escrow Agreement, on 24.6.2024, Gladys subsequently withdrew its prayers in Enclosure 36 in respect of, inter alia, the application for the provision of security. [58] In the premises, it is the judgment of this Court that there was no inordinate delay in the release of the Vessel from arrest at all. Once the alternative security funds under the Tripartite Escrow Agreement were paid into Escrow Stakeholder, the Vessel was immediately released from arrest on 4.6.2024. There was no delay in the release of Vessel for the period from 30.5.2024 till 4.6.2024, as the Plaintiff’s Malaysian solicitors were on standby and cooperative to facilitate in the release of the Vessel by the Sheriff through an Instrument of Release. [59] There was no ‘obstructive stance’ on the part of the Plaintiff as alleged by Gladys. Thus, to my mind, it was wholly reasonable and justified on the part of the Plaintiff in the circumstances to refuse to accept alternative security offered by Gladys vide the alleged Solicitors’ Agreement pursuant to Order 70 Rule 33 of the ROC 2012 by way of payment into Court, purportedly for the release of Vessel from arrest for the period 10.5.2024 till 29.5.2024 in this Admiralty in Rem action. [60] Hence, the declarations sought by Gladys that the Plaintiff’s refusal to accept security offered by it for release of the Vessel from arrest in this action was wrongful and unreasonable are wholly misconceived, untenable and devoid of any merits in the circumstances and justice of this case. [61] The aforesaid also means that Gladys’ application for damages suffered by Gladys due to the Plaintiff’s purported refusal to accept the offers for security and or prolongation of the arrest to be assessed and paid by the Plaintiff is also without any merits. Conclusion [62] In the premises, this Court dismissed with costs the application under Enclosure 47. Dated the 6th day of March 2025 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 & Admiralty Counsel: