Find a Lawyer

Admiralty Suit No. 30 of 1984, decided on 1st February, 1984.

---Ss. 4 (4) & 3 (2) Suit in rem against vessel-Before action in rem against a ship instituted under S. 4 (4) of Ordinance it must be shown that : (i) Claim in suit falls in any one of categories of cases mentioned in clauses (a) to (h) and (j) to (g) of subsection (2) of S. 3 of Ordinance ; (ii) claim arises in respect of a ship ; and (iii) on date of accrual of cause of action person who would be liable in an action in personam was either owner or charterer or in possession or in control of ship If all these three conditions are shown to exist then such a claim is also enforceable in an action in rem against ship concerned or any other ship beneficially owned as respect majority shares therein by that person on date of filing of claim in rem irrespective of fact whether claim gives rise to a maritime lien on ship or not under admiralty jurisdiction of High Court.

---S. 4 (4) Time charterer or a charterer by demise, held, do not fall in category of a person who beneficially owned as respect majority shares of a ship as they only beneficially possess ship for time being subject to validity of Charter Party Agreement and by that reason they do not acquire any right of ownership in maiority share of that ship Company only a time charterer of ship and ownership of ship claimed by some one else in 100% which is not disputed Averments of plaint showing that only person made liable for claim in suit in an action in personam is that company and it is not case of plaintiff that if an action in personam is brought against real owner of ship said company would be liable for claim in suit Action in rem, held, not maintainable against ship in circumstances Order of arrest of ship made previously, vacated.

Ghulam Muhammad Ibrahim for Plaintiffs.

Abdul Rauf for Defendants.

This application for arrest of the ship m. v. "Psiloritis" which is presently berthed at Karachi Sea Port is made by the plaintiff in the above suit under rule 731 of the Sind Chief Court Rules (O. S.). The suit which been filed under admiralty jurisdiction of this Court discloses the follow facts :

The defendant No. 2 on 17th February, 1983 through their agent LESCO offered to appoint plaintiff as their agent in Pakistan to handle all ships belonging to defendant 2 which call at the Karachi Sea Port. The 1 plaintiff accepted the above offer on 18th February, 1983 and rendered services to several ships belonging to defendant No. 2 as and when they called at Karachi Port. A sum of Rs. 5,78,106.69 is due and payable to plaintiff by defendant No. 2 in respect of disbursements made by plaintiff in connection with those ships of defendant No. 2 which called at Karachi Port prior to the filing of above suit. The defendant No. 2 are avoiding to settle the above dues to plaintiff and have appointed defendant No. 3 to deal with the ship (defendant No. 1) which is presently' at Karachi Sea Port. The claim is sought to be enforced against defendant No. 1 (the ship) on the ground that it is beneficially owned by defendant No. 2.

On 19th January, 1984, interim order for arrest of defendant No. I in the suit was passed by the learned Chief Justice and thereafter it came up for hearing before me on 24th January, 1984 under the orders of learned Senior Puisne Judge before whom the matter was laid for hearing on 22nd January, 1984 and 23rd January, 1984. I heard the learned counsel for plaintiff and defendant No. 1 on 24th January, 1984, on the application under rule 731 of the Sind Chief Court Rules (0. S.) and reserved orders thereon after hearing them in view of the importance of the point argued before me and the fact that no case law relevant to the point in issue was cited at the Bar at the hearing of the application.

It may be mentioned here that in so far the dues of plaintiff claimed in the suit against defendant No. 2 is concerned, there is no denial for the present on the material before me. The arrest of the vessel is also not opposed either by defendant No. 2 or 3 who remained absent at the hearing of application in spite of service of notice of application on them. The arrest is opposed by defendant No. 1 alone who has filed affidavit of the Master of Ship in opposition. The only contention of defendant No. 1 is that the ship belongs to a third party who had given the ship (defendant No. 1) to defendant No. 2 in the suit under a Time Charter. Along with the counter-affidavit of Master of Ship, photostat of the Registration Cer tificate of defendant No. 1 showing Messrs Filo Shipping Maritime S. A. (Liberia) as the 100% owner of defendant No. 1, and the photostat of Time Charter executed by the owner of defendant No. 1 in favour of defen dant No. 2 are filed. The genuineness of these documents are not denied in the rejoinder affidavit filed in the case on behalf of plaintiff. The learned counsel for defendant No. 1 contended before me that defendant No. 1 could not be arrested in the above suit as the claim in suit cannot be enforced in an action in rem against defendant No. 1 which is owned by a stranger to the suit. On the other hand the learned counsel for the plaintiff argued that according to the documents filed by defendant No. 1 with the counter-affidavit, the defendant No. 1 is presently under a charter with defendant No. 2 who in law will be deemed to be the beneficial owner of the ship on the date of filing of the suit and as defendant No. 2 would be liable for the claim in the suit in an action in personam the same is capable of being enforced by an action in rem against defendant No. 1. Reliance to this connection is placed by the learned counsel on section 4 (4) of the Admi ratty jurisdiction of High Courts Ordinance, 1980 (Ordinance XLII of 1980) which reads as follows :

"4 ..

< [if supportLists]>(1) .

< [if supportLists]>(2) .

(3) .

(4) In the case of any such claim as is mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 with a ship, where the person who would be liable on the claim in an action in personam was when the cause of action arose, the owner or charterer of, or in possession or in control of the ship, the admiralty jurisdiction of the High Court only, whether the claim give rises a mari time lien on the ship or not, be invoked by an action in rem against

(a) that ship, at the time when the action is brought it is bene ficially owned as respects majority shares therein by that person, or

(b) any other ship which, at the time when the action is brought benefi cially owned as aforesaid."

The contention of the learned counsel for the plaintiff in effect is that defendant No. 2 as the charterer of defendant No. 1 shall be deemed to be owning beneficially defendant No. 1 on the date of filing of the present suit, while defendant No. 1 contends that the expression "beneficially owned as respect majority shares therein" means, only the real owner of the ship and does not include a time charterer. The present admiralty jurisdiction exercised by this Court is conferred on it by Ordinance XLII of 1980 which was promulgated on 2nd September, 1980. There appears to be no reported decision on the point In issue by the superior Courts in Pakistan and therefore I looked for English cases in this regard. The present section 4 (4) of Ordinance XLII of 1980 appears to be almost a reproduc tion of section 3 (3) of the English Administration of Justice Act, 1956, with the only variation that in the English Act of 1956 the expression used is "beneficially owned as respect all the shares therein" while in section 4 (4) of Ordinance XLII of 1980 it is "beneficially owned as respect majority shares therein". Therefore the difference in the two sections is only to the extent of expression "all the shares" and "majority share", which in any view will make no material difference on the decision of the application before me. The expression "beneficially owned as respect all the shares therein" used in section 3 (3) of the English Administration of Justice Act, 1956 which is equivalent of section 4 (4) of Ordinance XLII of 1980 came up for consideration in the following three cases on which I would lay my hands:

(i) The St. Merriel's case (1963) 1 Lloyd's List Law Reports 63.

(ii) Medway Drydock and Engineering Company Ltd. v. The Andrea Ursula (1971) 1 Iloyd's Law Reports 145.

(iii) Icongreso del Partido's case (1978) 1 All England Law Reports 1169 (Q. B. D.).

In the first mentioned case of St. Merriel, a suit in rem was filed by Smith Cock Company Ltd. against the ship on the ground that they had carried out repairs to the ship at the request of a demised charterer. The owners of the ship opposed the writ issued in the case on the following grounds:

(i) The ship was at all materials times chartered by demise to British Car Carriers Ltd. of Nossau, Bhames.

(ii) The owners of the ship against whom proceedings were brought were not, and never had been, the persons who would be liable on the claim in an action in personam.

(iii) The charterer of ship by demise were not and never had been, beneficial owner in respect of all the shares in the ship.

(iv) The action was brought against a wrong person and proceedings in rem were not allowable.

The learned Judge who decided St. Merriel's case after examining in detail the provision of section 3 (3) of Administration of Justice Act, 1956 reached the conclusion that a charterer by demise is not included in the expression "beneficially owned as respect all shares therein", which means the true owner of the ship.

The view expressed in St. Merriel's case was however, departed in the second noted case of Andrea Ursula which was decided by another English Judge, Brandon, J. In Andrea Ursula's case also the action in rem was brought against the ship by the Company on account of repairs carried out to ship at the request of the demised charterer. It was found in Ursula's case that at the time the action in rem was commenced against the ship it was still under the possession and control of the same charterer as a demised charterer, at whose instance repairs were carried out to the ship. The learned Judge came to the conclusion in Ursula's case that the ship which is in full possession and control of that person as a demised charterer was benefi cially owned as respect all the shares therein by that person within the meaning of section 3 (4) of the Administration of Justice Act, 1956.

Both St. Marriel's case and Ursula's case were considered in the last mentioned case of I Congresodel Partido. This case was decided by yet another English Judge Robert Goff J. of Queens Bench Division (Admi ralty Court) who after considering the views expressed in St. Marriel and Ursula's cases and referring to several other decisions came to the following conclusions which appears at page 1201 of the report :

"The expression "beneficially owned as .respect all the shares therein" refers only to cases of equitable ownership, whether or not accompanied by legal ownership and are not wide enough to include cases of possession and control without ownership, however full and complete such possession and control may be."

With utmost respect I am unable to agree with the conclusions of Brandan, J. on the interpretation of section 3 (4) of the English Act of 1956 and would prefer the interpretation adopted in St. Mereiel and I Congreso del Partido's cases by Howson and Robert Goff JJ respectively which in my humble view is more in accord with the plain language of the statute.

In the light of the above discussed English cases I have carefully con sidered the provisions of section 4 (4) of Ordinance XLII of 1980 and I am of the view that before an action in rem against a ship is instituted under the aforesaid provision of law, it must be shown that : (i) the claim in the suit falls in any one of the categories of cases mentioned in clauses (e) to (h) and (j) to (q) of subsection 2 of section 3 of the Ordinance ; (ii) the claim arises in respect of a ship ; and (iii) on the date of accrual of cause of action the person who would be liable in an action in personam was either the owner or charterer or in possession or in control of the ship. If all the above mentioned three conditions are shown to exist, then such a claim is also enforceable in an action in rem against that ship or any other ship beneficially owned as respect the majority shares therein by that person on the date of filing of the claim in rem irrespective of the fact whether the claim gives rise to a maritime lien on the ship or not under the Admiralty jurisdiction of this Court. A time charterer on a charterer by demise, however, in my opinion, do not fall in the category of a person who beneficially owned as respect majority shares of the ship, as they only beneficially possess the ship for the time being subject to the validity of the Charter Party Agreement and by that reason they do not acquire any right of ownership in the majority shares of 1 that ship. In the case before me it is an admitted position that defendant No. 2 is only the time Charterer of the ship "Psiloritis", as is evident from the copy of Charter Party Agreement filed with the counter-affidavit of master of ship. In fact the case wag argued by the learned counsel for the plaintiff on this basis before me. The ownership of the ship is claimed by Filo Shipping Maritime S. A. (Liberia) in 100%. It has not been shown that the claim of ownership of ship made in the counter-affidavit is false or illusory. From the averment in plaint it is quite clear that the only person who would be liable for the claim in suit in an action in personam is defendant No. 2. It is not the case of plaintiff that if an action in personam is brought against the real owner of ship, he would be liable for the claim in the suit.

I am therefore; of the view that no action in rem is maintainable against defendant No. 1 in the circumstances of the present case and accordingly vacate the order of arrest passed on 19th January, 1984. There will however, be no order as to costs, in the circumstances of the case.

M. Y. H. Application rejected.

***