THE TAI YANG HE

HCAJ322/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 322 OF 1998

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Admiralty Action in rem against the ship or vessel "TAI YANG HE" and the
four ships or vessels listed in the schedule annexed to the Writ

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J U D G M E N T

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1. I have before me an application for default judgment in action HCAJ199/2000 brought by the plaintiff, Elf Lubricants Hong Kong Ltd, and a further application by the two respective plaintiffs in the two different actions (that is HCAJ199/2000 which, for convenience, I will call the second action, and in HCAJ322/1998 which I will call the first action) for payment out of the sums now in court which was paid in, pursuant to an order made by Yam J on 21 August 2000, copy of which can be seen at pages 133-134.

2. The history of this matter is somewhat complicated and unusual. The claim in the first action was brought by cargo owners, who claim to have suffered damages as result of the breach of contract and the first action was brought in rem and it is not necessary for me to go into the detailed reasons why no security was obtained except to say that the vessel ran away whilst under arrest. But judgment was entered in that first action by an order of Yam J, and the judgment sum as could be seen at page 134 was US$52,717.92 up to 21 August 2000. With accrued interests at judgment rate, the judgment sum payable to the plaintiff in the first action should now come to US$67,146.

3. The absconding of the vessel in the first action resulted in the vessel, the subject matter of the second action being the subject of execution by the plaintiff in the first action. What happened is that the vessel "He Fa" came to Hong Kong and by a simultaneous process of both arrest in the second action by the plaintiff, Elf Lubricants Hong Kong Ltd and execution by the plaintiff in the first action, the vessel was detained. The vessel was released again around 21 August 2000 because money was agreed to be paid in (the sum of HK$1,193,400) to answer as the security for the judgment in the first action and for the judgment in the second action. "He Fa" was therefore released. It was, Mr Yang, who says, he was the owner of "He Fa" and that it was not the subject of the claim and that in fact the amount that have been paid in should not be paid in because "He Fa" could not legitimately be arrested or executed on and the applications for the release of security paid in were issued respectively on 3 and 7 March 2001. These applications are somewhat complicated and they took a bit of time. I believe I had to give directions in relation to these applications before the hearing could properly take place. The hearing took place on 4 and 5 July. At the end of the hearing I gave judgment against Mr Yang and the vessel and in favour of the plaintiffs. I held that the applications failed with costs. So that was the state of affair on 5 July. I understand, subsequent to the delivery of that judgment, a notice of appeal was put in but so far no step had been taken for the appeal to be heard and no date had been fixed for the hearing of the appeal.

4. So far as today's various applications before me is concerned, a few of the matters can be dealt with fairly easily. I have no problem in coming to the view that the default application for judgment in the second action should succeed and I order judgment to the plaintiff in the second action in the sum of US$40,751.36, which is inclusive of interests up to today. I also order that the plaintiffs in that second action is entitled to its costs of the application as well as costs of the action itself which of course will include things like costs of the arrest. By way of gross sum assessment under the Order 62, rule 9(4)(b), I assess the total costs of the action and of the application (excluding from it in that gross sum assessment the costs of the failed application of March 2001) and I assess the costs in the sum of $50,000.

5. What is problematical is the payment out. I can see no problem and I order that the payment out should be as follows. From the amount in court plus accrued interest, they should be paid out:-

(1) To the plaintiff in the second action the judgment sum inclusive of interests of US$40,751.36.

(2) To the same plaintiff in the second action HK$50,000 as being the gross sum assessed costs.

(3) To the plaintiffs in the first action the judgment sum of $67,146 which is of course inclusive of interests up to today.

(4) To the plaintiffs in the first action the sum of HK$105,715.39. This is a sum for the costs in that first action that had been assessed by Yam J by his order at page 134 and I have included some interests at judgment rate on that sum and that is why the sum that I sanction the payment out in relation to costs in the first action (excluding costs of failed application of March 2001) is HK$105,715.39.

6. The amount that had been paid in was $1,193,400. Accrued interest on that fund up-to-date would probably be another $44,000, if the rate of interest from August 2000 to now is at the rate of say 3%. So one ought to be looking at up-to-date, a total figure in court of about $1,238,152.50. The amount that I have ordered to be paid out comes to a total of Hong Kong dollars (having converted the US dollar at $7.8) $997,314.79. So there would still be left in court the sum of about $240,000.

7. By my order of 4 July, I ordered that the applicants in the applications of March 2001 by Mr Yang and the owners of the vessel, should be jointly responsible to those plaintiffs for the failed applications. I have before me the affidavit of Mr Baker in relation to the failed applications which sets out a disbursement of $250,000 and also large solicitor's costs incurred by the plaintiffs. I have also put before me, in a summary form, costs of the plaintiffs for the failed applications. The solicitor's costs alone came close to $800,000 and disbursement is $254,572, but of course included in that disbursement is a small cost for the arrest of the vessel.

8. It seems to me that on a proper taxation of that costs which had been awarded in favour of the plaintiffs, the plaintiffs are likely to recover a sum at least in excess of $600,000. I express in the course of the hearing that I suspect a proper figure would probably be close to $800,000. The question before me is whether I should order the payment out of the remaining sum, the balance left in the court after the payment out of the first four items I mentioned, as being part payment of the plaintiffs' costs in the failed applications. I can see that the plaintiffs are going to have a shortfall. It seems to me that there is no reason to wait for the full taxation to take place when the amount will be ascertained. So notwithstanding my inability today to do a gross sum assessment for the costs of the failed applications (I did not do it not because that there is any merits in the submission made to me by Mr Chan but out of abundance of caution in order to reduce further unnecessary costs) and even in the absence of a gross sum assessment, I can see no injustice in ordering the remaining sum, the balance in court after the payment out of the first four items to be paid to the plaintiffs' solicitors and I so order.

9. Mr Chan has raised the question of the pending appeal. A pending appeal normally does not work as a stay of execution. There is no stay of execution application before me. It seems to me that if there is any complaint, then that complaint should be addressed to the legal advisors handling this matter. There is, as far as I can see, no injustice in ordering the payment out. If there was an intention to genuinely pursue the appeal, action will have been taken and steps should have been taken in relation to the application to pay out which have been launched something like nearly a month ago. I am not in any way, persuaded from staying the order which I have just made merely by reason of the existence of a notice of appeal. I should also point out that in any event, Mr Yang, who is foreigner, would likely be ordered to put up security for any appeal which would be high, probably in excess of $300,000. It seems to me that this is a matter that should be disposed of as soon as possible, and that if there is any application to be made, I have no doubt the solicitors handling the matter for the appellant can bring an urgent application to the court of appeal. The order therefore is that there will be payment out to the plaintiffs in the way I indicated.

Representation:

Mr Clifford Smith, S.C., instructed by Messrs Clyde & Co., for the Plaintiffs in both Actions

Mr Kevin Chan of Messrs Dibb Lupton Alsop, for Mr Yang Jing Bo, in both Actions

Please refer to CACV1946/2001 for the relevant appeal(s) to the Court of Appeal.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HCAJ322/1998

ADMIRALTY ACTION NO. 322 OF 1998,

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Admiralty Action in rem against the ship or vessel "TAI YANG HE" and
the four ships or vessels listed in the schedule annexed to the Writ

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J U D G M E N T

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1. This is an application by a Mr Yang purporting to be the owner of the vessel "He Fa" which was the subject of claims by two different plaintiffs in the two different admiralty actions HCAJ322/1998 which I will call the first action, and HCAJ199/2000 which I will call the second action, where the claims have been made in rem against the vessel "He Fa".

2. The application now before the court by Mr Yang is that Mr Yang is the true-owner of the vessel "He Fa" which he said is also known under the Chinese Registry, i.e. the registry in Shantou, as Xiang Xing ("XX").

3. The issues before the court on the application of Mr Yang are :

(1) whether the vessel "He Fa", which is the subject of the claim and the subject of arrest by the plaintiffs, is in fact the same ship as the vessel "XX" said to be owned by Mr Yang; and

(2) if the identity of the vessels is the same, whether Mr Yang is the true beneficial owner of the vessel.

It seems to me, during the course of the hearing, that the first issue will be of critical importance and that if decision is made in favour of the plaintiffs on the first issue, there is no necessity to consider and hear elaborate arguments on the second issue.

4. The plaintiffs' case on the first issue is a very simple one and they said that the two vessels "He Fa" and "XX" are not the same for two reasons. Firstly, the year of build of "He Fa" was 1977 whereas "XX" was built in 1983. Secondly, the plaintiffs relied on the question of identity of the vessel that the horsepower of the vessels are different.

5. So far as the year of build is concerned, I think it is clear both from the visual inspections of the vessels done by the two sets of surveyors, i.e. Messrs Andrew Moore & Assocs Ltd's report of 28 August 2000 as well as Messrs Carmichael & Clarke Co. Ltd's report dated 19 June 2001, that the year of the build of the vessel was 1977. The documentations in support are Panamanian Register Corporation Record of Construction at page 245, the Certificate of Security of Republic of Panama at page 250, the Ship Safety Radio Certificate at page 251, the Lloyds Register extract of year 2000 - 2001 for "He Fa" at page 317, the Cargo Ship Safety Certificate at page 319, the Lloyds Register for 1999 - 2000 for Taiyo Maru No.8 which was the previous name of the vessel at page 327, and the Llodys Register for 1986 - 1987 of Taiyo Maru No.8 at page 339, all show that the vessel "He Fa" was built in 1977. The vessel was of course previously Taiyo Maru No.8 and that is clearly shown by a visual inspection of the vessel with the previous paint work showing the previous name of the vessel. So there is no doubt that the true date of the build of the vessel arrested and that was the only vessel we are concerned with, "He Fa" was 1977.

6. So far as the claim of Mr Yang, that he is the owner of the vessel "XX" which is also known as "He Fa" is concerned, all the documentation in relation to "XX" shows that the year of the build was in 1983.

7. There is a suggestion made by Mr Ng for the defendants in his forceful argument before the court that in fact the vessel "He Fa" that was arrested had a history which shows its previous name as being "Hang Li Sheng" and, if one linked "He Fa" to "Hang Li Sheng" and the documentation in relation to "Hang Li Sheng", then although there is a mistake of the year 1983, that can all be explained. But the court can only act on the documentation that had presented to the court and so far as the particulars about "XX" is concerned, it undoubtedly show the year of build in 1983. I appreciate, of course, that even in the Provisional of Patente of Panama Registry at page 318, the year of the build of the vessel was shown as 1983, but it should be noted that page 318 cannot possibly be the whole documentation given to the Panama Registry because the Lloyds Register shows the year of the build as being 1977 and the Lloyds Register, usually is very reliable basing its information from the full documentation from Panama. It should also be noted that the Lloyds Register shows in two other respects information which are not reflected at page 318, for example, the name of the owner of the vessel was shown as Hainan International Marine Co. and not Success Partners Maritime Inc., the so-called charterer on page 318, and the horsepower of 749.7 at page 318 is different from what is shown in the Lloyds Register at 1,324kw. I am not persuaded that page 318, in fact assist Mr Ng's client in showing that there had been such mistakes made as to justify the conclusion that it is the same vessel, so far as the year of build is concerned.

8. The other particulars relied upon by the plaintiffs to show that the vessel is different is the horsepower of the vessel. Mr Moore's inspection of the vessel show the main engine power as being 1,800 PS, namely Power at Shaft, and this was derived from a sighting of the ship's papers including the "Principle Particulars" of the ship at pages 348 and 361. This figure of 1,800 PS or 1,800 BHP translate to output of 1,324 kw on the footing that 2,324 divided by 1,800 equals to 749.70 divided by 1,019. That horsepower of 1,324 kw is reflected in the Lloyds Register at page 317 as being the true horsepower of the engine of the vessel arrested, "He Fa". On the other hand, "XX" particulars is undoubtedly 749.70 kw. There has been no affidavit put before the court to suggest how the "XX" horsepower was so wrong because it shows the very much lower horsepower of 749.70 kw. Mr Moore said he saw no signs of any modifications of the engine of "He Fa" as to replace the 1,324 kw engine with a smaller engine, see paragraph 11 of his report at page 349.

9. So far as the first issue is concerned - on the question of whether "He Fa" and "XX" is the same vessel, I must conclude that Mr Ng, notwithstanding his valiant effort, has failed to persuade the court that they are the same vessel. That, therefore, should conclude the first issue effectively.

10. I also based my conclusion on the first issue on a different basis. Mr Yang said he is the owner of the vessel "He Fa" and "He Fa" was registered in Panama under the Panama Registry. Under the Panama Registry, the owner, of course, is Hainan International. That is not disputed between the parties and the name of vessel is "He Fa".

11. Mr Yang's case, however, is that the same vessel "He Fa" was also registered at the same time and throughout from 1999 onwards up to the date of arrest in China under the name of "XX" in the Shantou Registry with the owner registered as Mr Yang. The vessel, however, sailed to Hong Kong with the name "He Fa", with the ship's name painted as "He Fa", flying the Panamanian flag. It seems to me that in these circumstances, having sailed to Hong Kong under the name "He Fa", under the Panamanian flag, with the registered ownership under Panama as Hainan International, it is not open and certainly the court should be very slow to come to a finding of fact that notwithstanding all these, a different ownership under a different name can be accepted. The assertion made is extraordinary which has only happened for the first time as far as I know in Hong Kong or anywhere because normally, the reason for registration is you fly a particular flag and you fly only that flag and you sail at all times under one flag and one name. You do not go around the world changing your name nor changing your flag as you go along. It can deflag, deregister and change to a new register, but you certainly do not sail around the world flying one flag with one name while disguising under the another name and under the another ownership. That seems to me, to be a very dangerous practice, which this court certainly would discourage any ship owner from indulging in and if it is believed in China, by Chinese ship-owners, that this kind of practice is acceptable, then as far as the Admiralty Court of Hong Kong is concerned, I would like to make it very clear that we do not encourage this practice and we do not find that particular kind of practice as being acceptable. My additional ground for rejecting the submission for the case of Mr Yang for setting aside of the rest under the first issue is also based on this consideration.

12. I, therefore, conclude that the case of Mr Yang fails and the applications of Mr Yang must be dismissed with costs. It is therefore unnecessary for me to consider the second issue.

Representation:

Mr Clifford Smith, SC, instructed by Messrs Clyde & Co., for the Plaintiffs in Both Actions

Mr Kenneth Ng, instructed by Messrs Dibb Lupton Alsop, for intended 2nd Defendant in HCAJ322/1998 and the Defendants in HCAJ199/2000