The Tjaskemolen v Profer AG [QBD (Admiralty)]

JurisdictionEngland & Wales
JudgeClarke J
Judgment Date01 August 1996
CourtQueen's Bench Division (Admiralty)
Date01 August 1996

Queen's Bench Division (Admiralty Court).

Clarke J.

The Tjaskemolen (now named Visvliet)
and
Profer AG
Owners of the ship Tjaskemolen (now named Visvliet)

D Matthews, with Miss C Ambrose on 5 November 1996 (instructed by Hill Taylor Dickinson) for the plaintiff.

M N Howard QC on 5 November 1996 and J Turner (instructed by Lawrence Graham) for the defendants.

The following cases were referred to in the judgments:

Adams v Cape Industries plcELR[1990] Ch 433; [1990] BCC 786.

Alletta, TheUNK[1974] 1 Ll Rep 40.

Arctic Star, The (unreported, 5 February 1985, CA).

Aventicum, TheUNK[1978] 1 Ll Rep 184.

Centro Latino Americano de Commercio Exterior SA v Owners of the Ship Kommunar (No. 2)[1996] CLC 1928.

Christiansborg, TheELR(1885) 10 PD 141.

Company, Re aUNK(1985) 1 BCC 99, 421.

Creasey v Breachwood Motors LtdUNK[1992] BCC 638.

Evpo Agnic, TheWLR[1988] 1 WLR 1090.

Freedom, TheELR(1871) LR 3 Ad & E 495.

Hero, TheENR(1865) Br & Lush 447; 167 ER 436.

I Congreso del PartidoELR[1978] QB 500

Joannis Vatis, The (No. 2)ELR[1922] P 213.

Kalamazoo, The(1851)15 Jur 885.

Kherson, TheUNK[1992] 2 Ll Rep 261.

Lloyd Pacifico, TheUNK[1995] 1 Ll Rep 54.

Maritime Trader, TheUNK[1981] 2 Ll Rep 153.

Moschanthy, TheUNK[1971] 1 Ll Rep 37.

Nordglimt, TheELR[1988] 1 QB 183.

Po, TheUNK[1991] 2 Ll Rep 206.

Point Breeze, TheELR[1928] P 135.

Saudi Prince, TheUNK[1982] 2 Ll Rep 255.

Silver Athens, The (No. 1)UNK[1986] 2 Ll Rep 580.

Silver Athens, The (No. 2)UNK[1986] 2 Ll Rep 583.

Varna, TheUNK[1993] 2 Ll Rep 253.

Westminster Bank Ltd v West of England Steamship Owners Protection Indemnity Association Ltd(1933)46 Ll L Rep 101.

Wild Ranger, TheENR(1863) Br & Lush 84; 167 ER 310.

Woolfson v Strathclyde Regional Council1978 SLT 159.

Arrest of ship Application to discharge security provided to procure release of vessel Vessel previously arrested and released by Dutch court after hearing on merits Vessel allegedly sold by defendant before date of writ Whether defendant remained beneficial owner of vessel Whether arrest abuse of process after release by Dutch court Whether affidavit in support of arrest application complied with rules Rules of the Supreme Court, 0. 75, r. 5(9); International Convention relating to the Arrest of Seagoing Ships (1952), art. 3(3); Supreme Court Act 1981, s.20(2)(h), 21(4), 21(8).

This was an application by the defendant to discharge or reduce the amount of security provided to procure the release of the vessel Visvliet from arrest.

The application was heard in two parts. In the first the applicant relied on two grounds: (1) that the affidavit in support of the application for arrest did not comply with 0. 75 in that it failed to state the nature of the claim; and (2) that the defendant was not the beneficial owner of the vessel when the writ was issued. The defendant said that the vessel had been sold to another company, GIN, before that date. The plaintiff argued that the sale agreement was a sham and not apt to pass the beneficial ownership of the vessel to the alleged buyer. It was a device to avoid providing security to the plaintiff for its claim. There was also an application for a reduction of the security.

On the second hearing of the application, the defendant applied to discharge the security on the grounds that a previous arrest of the vessel in Holland at the instance of the plaintiff was set aside by order of the Dutch court after a hearing on the merits. The defendant relied upon three grounds: (1) art. 3(3) of the 1952 Arrest Convention, (2) an alleged duty of the court to recognise the judgment or order of the court in Holland under art. 26 of the Brussels Convention, and (3) the position at common law, arguing that the second arrest was vexatious, oppressive and an abuse of process.

Held, dismissing the defendant's application to discharge the security and refusing to reduce it:

1 August 1996

1. While on the borderline, the affidavit in support did comply with 0. 75, r.5(9). It identified the charterparty. There was no doubt that a charterparty was a contract relating to the use or hire of a ship within the meaning of s. 20(2)(h) of the Supreme Court Act 1981. The affidavit said that the claim was for damages for breach of that charterparty and that it was unsatisfied. That was just a sufficient statement of the nature of the claim for the purposes of the action. Having regard to the history of the matter, the defendants could not have been in any doubt as to what the nature of the claim was.

2. It was common for shipowning groups to arrange their affairs by forming one-ship companies. There was no reason in law why they should not do so without any risk of the arrangements being held to be a sham. The position might be different where a group arranged its affairs in such a way as to divest a company within the group of its assets with the purpose and effect of ensuring that they would not be available to meet its existing liabilities, at any rate where the transfer was made to another member of the group at an undervalue. Depending upon the facts, such an arrangement was likely to be held to be a sham or facade, as those expressions were used in the cases. (The Evpo AgnicWLR[1988] 1 WLR 1090andAdams v Cape Industries plcELR[1990] Ch 433; [1990] BCC 786considered.)

3. Assuming that the plaintiff had a bona fide arguable claim under the charterparty, the express purpose of the sale arrangement on the evidence was to ensure that the plaintiff could not arrest the vessel, and it was reasonably to be inferred that a further purpose and certainly the effect of it was to ensure that she would not be available for the enforcement of any arbitration award. The defendant had no other assets apart from any rights which it might have against the company to which the vessel was transferred. On the facts the alleged agreement to sell the vessel to GIN was a sham or facade. It was not a genuine commercial transaction. It was never intended that GIN should pay a full price. Whatever other effect it might or might not have had, it did not have the effect of divesting the defendant of the beneficial ownership of the vessel. (Creasey v Breachwood Motors LtdUNK[1992] BCC 638followed.)

5 November 1996

4. Even if art. 3(3) of the Arrest Convention was part of English law, it had no application to the facts of the case. It applied only where a vessel was under arrest at the time of a second arrest or where the vessel had been released or a threatened arrest avoided by the giving of bail or other security. If art. 3(3) had been intended to prohibit a subsequent arrest in circumstances in which a vessel had been released from her first arrest pursuant to an order of the court it would have been drafted in very different terms.

5. The order of the Dutch court was not intended to have any effect in any other jurisdiction and there was no question of recognition under the Brussels Convention. It was plain that the Dutch court was considering only whether to order the release of the vessel from arrest in the proceedings in Holland.

6. The mere fact that a plaintiff had arrested a vessel which had previously been released by order of the Admiralty Court or another court of competent jurisdiction would not necessarily amount to an abuse of process. All would depend upon the circumstances. So, for example if a plaintiff were to seek to arrest a vessel in respect of the same claim in one jurisdiction after another it might well be an abuse of process to permit an arrest here on the ground that to do so would be oppressive and vexatious. The question was whether, having regard to the fact that the Dutch court ordered the release of the vessel after a hearing on the merits of the claim, it would be oppressive and vexatious to allow the security obtained as a result of the arrest in England to stand.

7. The plaintiff bore a share of the responsibility for the fact that the arrest was not maintained in Holland. In the circumstances the position here should be the same as it would have been in Holland if the arrest had been maintained. It would be oppressive to permit the plaintiff to retain the security if to do so would put it in a better position than it would have been in Holland. It would not be oppressive to permit the plaintiff to retain the security provided that it in turn provided security for any loss which the owners proved that they suffered as a result of arresting the vessel in England, if the claim failed.

8. That conclusion would have been the same if art. 3(3) of the Arrest Convention applied and the test were whether there was good cause to permit an arrest.

JUDGMENT

(1 August 1996)

Clarke J: This is an application by the defendant to discharge or reduce the amount of security provided to procure the release of the vessel Visvliet (previously called the Tjaskemolen) from arrest in this action. The vessel was arrested on 20 June 1996. The defendants have issued an amended notice of motion seeking that relief on a number of grounds. The present application to discharge the security is, however, limited to the grounds set out in para. 1 and 2 of the amended notice of motion, namely:

(1) The affidavit of Anthony James Goldsmith sworn herein in support of the application to lead to a warrant for arrest did not comply with the requirements of RSC, Order 75, rule 5(9)(a)(i), in that it failed to state the nature of the claim; and/or

(2) The said defendant vessel is not and was not at the time of the issue of the writ of summons herein owned by or chartered by demise to the person who would be liable for the claim brought by the plaintiffs on an action in personam and the plaintiffs claim is therefore outwith section 21(4) of the Supreme Court Act 1981;

It is important to note that I am not at present concerned with the grounds set out in para. (3), (5) and (6) of the amended notice of motion. Those paragraphs include para. (3) and (5) as follows:

(3) The said defendant vessel was previously arrested in the Netherlands...

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