PT ARK VISI TEKNIK v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP AND OTHERS

HCAJ 109/2017

[2019] HKCFI 209

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 109 OF 2017

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Admiralty action in rem against: The ship or vessel “TANGKAS” (Indonesian Flag) (IMO Number 9072252)

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D E C I S I O N

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1.  There are 2 applications before the court. Dealing firstly with the Plaintiff’s application for payment out of the judgment sum of US$14,751 from the security paid into court by the Defendants on 28 November 2017, the arguments are well-balanced. However, I have decided to allow the application for the following reasons :

(1)  Although there appears to be some substance in the Defendants’ allegation of fraud practised by the Plaintiff in obtaining the judgment in question regarding its authority to bring this action, there is no action on foot to set aside the judgment and the evidence relied upon by the Defendants has not been properly notarized and filed.

(2)  Further, there is no stay of execution application before the court.

(3)  There is certainly force in the Defendants’ submission that they may have difficulty recovering the money from the Plaintiff in the event that the judgment is successfully set aside given, eg, the failure of the Plaintiff to meet the security for costs ordered against it thereby resulting in the strike out of the remainder of its action.  However, this court has to balance the risk against the entitlement of a successful litigant to have the fruit of its success without delay.

(4)  Finally, in respect of the risk in question, this court has to bear in mind that the amount of the judgment is relatively modest.

2.  I further order that after the payment out of the judgment sum, the balance of the security, subject to the retention of a sum of HK$150,000 on account of the costs ordered in favour of the Plaintiff, should be released to the Defendants.

3.  In respect of the Defendants’ application to strike out the Plaintiff’s claim and set aside the judgment for want of authority on the part of the Plaintiff, this court is functus after the sealing of the judgment on 17 December 2018.  On the authorities of Lau Kak v Cheung Mo-kit [1995] 2 HKLR 470 and Moores Rowland and Anr v Grant Thornton and Ors, unrep, HCA 1126/2010 & HCA 735/2010, 8 June 2012, the proper procedure for challenging the judgment is by way of another action.  In the premises, this application is dismissed.

4.  I shall hear the parties on costs.

HCAJ 109/2017

[2018] HKCFI 2587

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 109 OF 2017

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D E C I S I O N

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1.  There are 2 applications before the court. One by the Plaintiff for summary judgment in respect of part of its claim and an application for security for costs by the Defendants.

2.  These applications are reasonably straightforward and the merits are clear. 

Summary judgment

3.  In respect of the summary judgment application, it relates to 2 of the Plaintiff’s 3 claims (referred as the 1^st and 2^nd transactions) against the Defendants. Those “transactions” were in fact part of the same dealing by which the Plaintiff provided engineering service to the Defendants in relation to their vessel MV “TANGKAS”. 

4.  The claims in question are well-documented.  Invoices were sent to the Defendants upon completion of work.  Chasers were issued repeatedly when the invoices were not paid.  The documents show that no dispute was raised by the Defendants over the outstanding payment.  There was simply procrastination on their part. 

5.  There are 2 issues raised by the Defendants to resist this application.  Firstly, it is suggested that the contract(s) for service was/were not made with the Plaintiff but with Ardent Shipping, whose name appeared on the invoices.  With respect, I do not find this to be a bona fide defence.  As explained by the Plaintiff, Ardent Shipping was a Singaporean sole proprietorship used by it to issue invoices for “convenience purposes”.  The invoices in question were in fact issued by the Plaintiff, albeit under the letterhead of Ardent Shipping. 

6.  The arrangement which the Plaintiff had described is not altogether unusual in the commercial world. More importantly, the contemporaneous documents show quite clearly that the party who contracted with the Defendants to provide the service was the Plaintiff.  There was no request by the Defendants for the Plaintiff to clarify its relationship with Ardent Shipping if they were in doubt.  Nor is there any suggestion that the Defendants had paid Ardent Shipping for the service in question. 

7.  The secondly issue concerns the interest claimed by the Plaintiff for the outstanding payment based on the terms set out in the invoices.  Quite sensibly, Mr Tsui who appears for the Plaintiff, sees the fragility of the Plaintiff’s case in this regard, and has accepted that the award of interest should be left to the court.

8.  Finally, I should mention that Mr Luxton, who appears for the Defendants, has referred this court to its decision in Skillsoft Asia Pacific Pty Ltd v Ambow Education Holding Ltd (No 2) [2016] 1 HKLRD 1052 and submitted that this application, involving a fragmentation of the Plaintiff’s case, is a misuse of the court’s resources because a trial will still be required by reason of the remaining claim of the Plaintiff. 

9.  The facts of Skillsoft are quite different to those before this court.  The 1^st and 2^nd transactions are separate and distinct from the 3^rd transaction (see below).  Hence, a summary judgment in respect of the first 2 transactions will reduce the scope of the trial and thereby result in saving of costs and public resources.

10.  For these reasons, judgment should be entered against the Defendants for the principal sums under prayers (1) and (3) of the Statement of Claim.  I award interest at prime plus 1% from the respective date of the invoices until today and thereafter at judgment rate(s) until payment.

Security for costs

11.  There is no issue that the Plaintiff is an Indonesian company and it has no identified asset in Hong Kong.

12.  There remains a 3^rd claim by the Plaintiff in this action relating to the supply and installation of 2 compressors on another vessel owned by the Defendants, MV “GESIT”.  This claim is defended on the basis that the compressors were of unsatisfactory quality and unfit for their purpose.  Indeed, the compressors had to be replaced within months of their installation.

13.  Given that the Plaintiff is a foreign company with no asset in Hong Kong and the nature of the dispute, I am unable to see any good reason why security for costs should not be ordered against the Plaintiff.

14.  As regards the intention of the Defendants to make a counterclaim arising from the defects of the compressors, I agree with Mr Luxton that it does not materially impact on this application because the Plaintiff had been provided with security for its costs under the security put up by the Defendants for the release of “TANGKAS” after it was arrested by the Plaintiff in Hong Kong.

15.  For the quantum of security, taking a reasonably broad brush approach and bearing in mind that the trial will only be concerned with the 3^rd transaction, I believe that a sum of HK$700,000 would be appropriate.

16.  Accordingly, I make an order in terms suggested in paras 63(a) and (b) of Mr Luxton’s skeleton argument dated 12 November 2018, save for the substitution of the quantum of security.

17.  I shall hear the parties on costs.