Motor Vessel 'Lulu Tahi', In re [1992] VULawRp 1; [1980-1994] Van LR 524 (17 January 1992)

[1980-1994] Van LR 524

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

Civil Case No. 184A of 1991

ADMIRALTY ACTION IN REM AGAINST:

THE MOTOR VESSEL "LULU TAHI"

BETWEEN:

PACIFIC TRADING ENTERPRISES LIMITED
a company incorporated under the laws of Vanuatu
Plaintiff

AND:

PACIFIC SEAWAYS (FIJI) LIMITED
Operator of the "LULU TAHI" a company incorporated under the laws of Fiji
First Defendant

AND:

REDERI AB GOTA LEJON
Owner of the "LULU TAHI" a company incorporated under the law of Sweden
Second Defendant

AND:

LARS WAHLIN
Managing Director of the First and Second Defendants of Norrkoping, Sweden
Third Defendant

Coram: Heerey A J

Mr J Ridgway for Plaintiff
Ms S Bothmann Barlow for Defendants

JUDGMENT

[ADMIRALTY - quantum of security to be paid under arrest]

The issue before me today concerns the appropriate amount of the security which should be provided for the release of the "Lulu Tahi" which is presently under arrest in Port Vila.

It is common ground that there should be security in the equivalent of 31631.38 Western Samoan tala for alleged disbursements paid on behalf of the vessel. A maritime lien has already been ordered in the Supreme Court of Tonga for this amount. But the plaintiff claims also that it is entitled to security against the vessel for USD 140,000.00 for damages for breach by the first defendant of an agreement dated 8th March 1991 under which the plaintiff was to provide "comprehensive marketing and management services including all the required advertising, promotions and facilitation with the agencies of the two Samoan Governments necessary to establish and maintain the vessel as a viable passenger and cargo operation between the two Samoan countries including port entries, exits and docking arrangements".

The plaintiff asserts that by virtue of section 21 (4) of the Supreme Court Act 1981 it has an action in rem against the vessel in respect of its damages claim and therefore the amount fixed for security should take into account that claim.

The second defendant is the owner of the vessel. Also on 8th March 1991 it demised the vessel under a bareboat charter in the Barecon A form for a period of one year with an option for two more years. Charter hire was to be, for the first year, 10% of the net profit from the operation, with "payment to be done every six months".

I reject at once such arguments advanced on behalf of the plaintiff that were based on the proposition that the charter was a sham and that the relationship between the first defendant and the second defendant was such that the true beneficial owner of the vessel was either the first defendant or the Wahlin family. The shareholdings of the two companies are quite different. The first defendant has three issued shares, one owned by the third defendant, one by an unrelated Swedish gentleman who was formerly the master of the vessel and the third by a citizen of Fiji. The second defendant has issued a total of 501 shares. Of these 452 are owned by a Swedish company Rederi AB which is owned or controlled by the third defendant's father, 17 are owned by the third defendant's sister Eva and 32 by his brother Olaf.

Turning to section 21(4) of the Act the plaintiff's claim in my opinion is one that is mentioned in section 20(2) (e) to (r). Specifically it is a claim answering the description of section 20(2) (h) because it arises out of an agreement "relating to the use or hire of a ship". The services the plaintiff was to provide must have been intended to assist the vessel in getting passenger and cargo business and in operating voyages. This surely must relate to the use of the vessel. To the extent that the Supreme Court of Tonga held otherwise when it considered the application for a maritime lien, I would respectfully disagree. The question of issue estoppel was not specifically raised before me, but in any event the material is not sufficient for me to determine whether an estoppel has been made out.

It was not disputed that the claim arose in connection with a ship, within the meaning of section 21(4)(a). The requirements of section 21(4) however formed the kernel of the debate before me.

The date when the plaintiff's cause of action arose would seem to be 1 November 1991. For present purposes I only have to consider whether an arguable case has been raised. On the plaintiff's version, the vessel's operations between Apia and Pago Pago ceased on or shortly before 29 October. On that date the third defendant, who is a director of the first defendant, arrived from Sweden. On 1 November the third defendant, in the company of the vessel's then master, told the plaintiff's representative that the first defendant had ceased its operations in the two Samoans, that "they" were planning to take the vessel to Fiji within a week and that "they" had found in Sweden a buyer for the vessel but "they" would still prefer to "shop around the Pacific for a buyer as it would save them extra costs". The plaintiff's representative raised the matter of outstanding fees but there was no satisfactory proposition from the third defendant.

The defendants contest the plaintiff's version as to these events, but this dispute cannot be resolved on the present application. If the plaintiff's version were accepted at trial, I think it is arguable that this amounted to a repudiation of the agreement between the first defendant and the plaintiff with the latter being entitled to damages.

On any view the first defendant was on 1 November still the charterer of the vessel, as well as being in possession and control of it, and thus the requirements of section 21(4) (b) are satisfied.

The remaining question is whether at the time when the action was brought (12 December 1991) the first defendant was still the charterer of the vessel under a charter by demise, which a bareboat charter admittedly is, for the purposes of section 21(4)(b)(i). This question turns on whether the charter party was terminated, as the defendants claim, on 3 November.

The evidence of the third defendant is that on 3 November, while in Apia, he was contacted by telephone from Sweden and "was advised that the second defendant had resolved to withdraw the vessel from the service of the charterer (the first defendant) effective immediately because hire charges pursuant to the charter party had not been paid, this pursuant to clause 9 of the charter party". He does not say who made this phone call.

Clause 9 of the charter party is part of the printed form and is obviously designed for hire payable by a lump sum per calendar month. Clause 9(e) provides: "In default of payment beyond a period of seven running days the owners to have the right of withdrawing the vessel from the service of the charterers, without noting any protest and without interference by any court or any other formality whatsoever and without prejudice to any claim the owners may otherwise have against the charterers under the charter".

It seems to me at least arguable that the purported reliance on clause 9(e) was ineffective. There is an obvious inconsistency between the printed form designed for monthly payments of hire, and the typed insertions, which make hire dependent on the earning of profit. On established principles of construction, typed or hand written additions prevail over inconsistent parts of a printed form since the former are more likely to represent the actual intentions of the parties. It seems here that the charter party was in essence a joint venture arrangement in which the owner was to share the fortunes of the charterer. If no profit was earned, no hire was payable. It seems very likely here that no profit had been earned, as it was the very unprofitability of the venture which prompted the defendants to take the action they did. On this basis the second defendant was not entitled to terminate the charter.

Since it seemed to be no part of the defendants' case that the charter was terminated by mutual agreement between the first defendant and the second defendant, the consequence would be that the charter party was still on foot at 12 December 1991.

I therefore propose to fix a sum for security which will include the amount of USD 140,000.

Certain wharf fees and other charges and expenses have been accumulating. I think the defendants should pay these because they have been incurred since 12 December 1991 as a result of the defendants' decision to offer only the 31 631.38 tala as security. Had the defendants provided what I have now held to be the proper security, these expenses would not have been incurred.

This has been a substantial application in which the plaintiff has succeeded. I therefore order the defendants to pay the plaintiff's costs of the application, such costs to be taxed in default of agreement.

I will hear at any early date an application for directions as to the further progress of this action.

Dated the 17th day of January 1992.

PETER HEEREY
ACTING JUDGE