On 16 December 2010, the vessel Phu Tan belonging to the defendant, Vietnam National Shipping Lines, capsized and sank in the Gulf of Tonkin in heavy seas along with 111 containers onboard the vessel belonging to the Vietnam-incorporated plaintiff, Hung Dao Container Joint Stock Co. The plaintiff commenced in rem proceedings in Singapore and arrested the sister ship Vinalines Pioneer. Article 1.1.a of the International Convention for the Unification of Certain Rules relating to Arrest of Sea-Going Ships (1952) (Arrest Convention 1952), which includes ‘damage caused by any ship either in collision or otherwise’ within the meaning of a maritime claim, is given effect in Singapore via s 3(1)(d) of the High Court (Admiralty Jurisdiction) Act (HCAJA). There were three issues on which the appeal was based. First, whether the plaintiff’s claim fell within the meaning of ‘a claim for damage done by a ship’ under s 3(1)(d) of the HCAJA (jurisdictional issue). Second, whether the plaintiff’s claim was time barred under Vietnamese law and so the writ and action should be set aside (striking out issue). Third, whether the plaintiff had failed to make full and frank disclosure of material facts and so the warrant of arrest should be set aside (non-disclosure issue).

Held: The court allowed the defendant’s appeal in part.

The appeal was successful on the jurisdictional issue. The jurisdictional issue centered upon whether the phrase ‘damage done by a ship’ under s 3(1)(d) of the HCAJA included damage or loss to cargo or other property on board the offending vessel. The judge considered the English legal precedents on the damage lien, as well as the interpretation of ‘damage done by a ship’ under English legislation ie s 7 of the Admiralty Court Act 1861, which made clear that a claim for damage to property on board the offending vessel did not give rise to a damage lien or in rem jurisdiction under s 7 of the 1861 Act. These precedents were followed in Singapore. The judge also considered authorities from other jurisdictions which have persuasive value. The more significant cases which concerned the jurisdictional issue came from Australia and New Zealand namely Nagrint v The Ship Regis (1939) 61 CLR 688 (The Regis), Union Steamship Company of New Zealand v Ferguson (1969) 119 CLR 191 (Union Steamship) and Fournier v The Ship Margaret Z [1999] 3 NZLR 111 (The Margaret Z).

Modern Singapore admiralty jurisdiction is largely based on English precedents. The instructive English authority, Berliner Bank AG v C Czarnikow Sugar Ltd (The Rama) [1996] 2 Lloyd’s Rep 281, a case based on s 20(2)(e) of the United Kingdom Senior Courts Act (which is in pari materia with s 3(1)(d) of the HCAJA), is an example of this. According to this case, there are three criteria, all of which must be satisfied, to qualify damage done by a ship as giving rise to a maritime lien.

First, the damage had to be founded on the fault or breach of duty by those in control of the ship (navigation criterion). This is the negligence in the navigation or management of the ship as understood in a physical sense, and which touched upon a ship’s efficient and safe navigation. Although the Australian and New Zealand cases appears to have extended the navigation criterion to other activities of the ship, such as cargo operations, the judge stated that extending the jurisdiction under s 3(1)(d) of the HCAJA would have serious and far-reaching consequences for a statutory lien.

Second, the ship had to be the actual or noxious instrument by which the damage was done (instrumentality criterion). This actual or noxious instrument is also commonly referred to as the ‘instrument of mischief’ which implies that it must be the active cause of the damage (i.e. ship’s activity). The English authorities took the position that the ship’s activity in the context of damage to property was confined to damage caused as a consequence of negligent navigation. While the Australian and New Zealand authorities appears to take the position that the instrumentality criterion was extended to apply to other activities of the ship that are independent of navigation and management of the ship as a moving object such as working of the ship’s gear to operate cargo, the judge observed that in Australia, Windeyer J in Union Steamship would have come to a different conclusion on this point if he was not bound by the principles in The Regis, and that even in The Regis itself, Allsop J was concerned with the navigation criterion and not the extension of the ship’s activity to other non-navigational matters. As for New Zealand, there was no decision that followed The Margaret Z, which was also regarded by commentators as controversial.

Third, the damage had to be sustained by property external to the ship (externality criterion). The externality criterion was significant as the loss of containers on board the Phu Tan as carrying ship was not something that the Phu Tan could have come into contact directly in a physical sense, or indirectly by reason or the unseaworthiness of the carrying vessel.

The question before the court was whether the externality criterion is required to satisfy the legal character of a claim for damage done by a ship under s 3(1)(d) of the HCAJA. This will determine whether the reference to damage done by a ship under s 3(1)(d) HCAJA included cargo or other property on board the offending vessel. The judge examined the authorities leading to the Clarke J’s pronouncement of the externality criterion in The Rama and found it to be supported by principle and authority.

The next question was whether the externality criterion in The Rama should be followed and adopted as a matter of Singapore law for the purposes of in rem jurisdiction under s 3(1)(d) of the HCAJA. Australia and New Zealand have applied a wider test to claims for ‘damage done by a ship’ in respect of ‘damage’ sustained by a person in a series of personal injury cases. However, the judge was not convinced that a claim for personal injury due to cargo operations would, as a matter of Singapore law, be properly described as ‘damage done by a ship’. The judge preferred the view that the personal injury cases from Australia and New Zealand do not provide a legal basis to extend the jurisdictional ambit of s 3(1)(d) of the HCAJA to loss or damage to property that was carried on board the offending vessel. In addition, the judge considered the position taken by England and Hong Kong to be closer to Singapore jurisprudence on this point.

Finally, even though the establishment of admiralty jurisdiction involves enforcing a statutory lien against the Vinalines Pioneer (sister ship) rather than enforcing a maritime lien on Phu Tan (offending ship), it is common for the courts to turn to cases on damage done by a ship in the context of a maritime lien for damage for precedent and guidance in considering a statutory claim for damage done by a ship.

Hence, the judge held that the externality criterion, along with the other two criteria set out in The Rama, are to be taken into account in establishing jurisdiction in rem under s 3(1)(d) of the HCAJA.

However, the appeal was unsuccessful on the striking out issue and the non-disclosure issue.

For the striking out issue, it was not possible to decide in favour of one expert’s interpretation and opinion of Vietnamese law over the other at this summary stage. The judge noted that the defendant continued to pay hire for containers after they have been lost and these payments may or may not have implications on time bar issues under Vietnamese law.

For the non-disclosure issue, the judge stated that the duty of full and frank disclosure was not to be conflated with counsel’s duty as an officer of the court and commented that the defendant misapplied the duty of full and frank disclosure of material facts to support their case. The judge also considered the complaints of non-disclosure of material facts to be trivial, far-fetched or without basis and hence did not allow the appeal on this point as well.