Case: Liverpool &amp; London S.P.&amp; I. Asson. Ltd Vs. M.V. Sea Success I

of Defendant No. 1 Sea Success- I being sister ship of vessels "Sea Glory" and "Sea Ranger" in respect of whom the claim has been raised in the suit, we find it difficult to approve the view of the learned Single Judge in this regard. It cannot be overlooked that ship is a valuable commercial chattel and her arrest undeservingly severely prejudices third parties innocently as well as affect the interest of owner, crew member, cargo owner, shipper etc. adversely and, therefore, it is all the more necessary to analyse the plaint meaningfully at the threshold to find out whether it discloses cause of action or not and not on technical and formal reading that if discloses cause of action and wait for trial." The approach of the High Court, in our considered opinion, is not correct. For the purpose of rejecting a plaint it is not necessary to consider whether the averments made in the plaint prove the factum that the defendant No. 1 "Sea Success-I" is a sister ship of "Sea Glory" and "Sea Ranger" or the said two ships are beneficially owned by the defendant No. 2. The reasons which have been assigned in support of the said aforementioned finding that that the ship is a valuable commercial chattel and her arrest undeservingly prejudices third parties as well as affect the interest of owner and others is a question which must be gone into when passing a final order as regard interim arrest of ship or otherwise. For the aforementioned purpose the Vessel herein could file an application for vacation of stay. While considering such an application, the Court was entitled to consider not only a prima facie case but also the elements of balance of convenience and irreparable injury involved in the matter. In such a situation and particularly when both the parties disclose their documents which are in their possession, the Court would be in a position to ascertain even prima facie as to whether the Club has been able to make out that "Sea Glory" and "Sea Ranger" are sister vessels of the "Vessel".The reason for the aforementioned conclusion is that if a legal question is raised by the defendant in the written statement, it does not mean that the same has to be decided only by way of an application under Order 7 Rule 11 of the Code of Civil Procedure which may amount to pre-judging the matter.Furthermore, the question as to whether the asset of a 100% subsidy can be treated as an asset of the parent company would again depend upon the fact situation of each case. In The Aventicum [1978] 1 Lloyds L.R. it has been held: "I have no doubt that on a motion of this kind it is right to investigate the true beneficial ownership. I reject any suggestion that it is impossible "to pierce the corporate veil". I of course remember, as Mr. Howard urges, the case of Saloman v. Saloman & Co., [1897] A.C. 22, but of course it is plain that s.3(4) of the Act intends that the Court shall not be limited to a consideration of who is the registered owner or who is the person having legal ownership of the shares in the ship; the directions are to look at the beneficial ownership. Certainly in a case where there is a suggestion of a trusteeship or a nominee holding, there is no doubt that the Court can investigate it. I think that it may well be, without having to resolve the difference of opinion expressed by Mr. Justice Brandon and Mr. Justice Goff in the two cases to which I have referred that the Court has the power and should in some cases look even further." Yet again in The Andrea Ursula [1971] 1 Lloyds L.R. 145, the Court opined: "There is no definition in the Act of the expression "beneficially owned" as used in sect. 3(4). It could mean owned by someone who, whether he is the legal owner or not, is in any case the equitable owner. That would cover both the case of a ship the legal and equitable title to which are in one person, A, and also the case of a ship the legal title to which is in one person, A, but the equitable title to which is in another person, B. In the first case the ship would be beneficially owned by A, and in the second case by B. Trusts of ships, express or implied, are however, rare and the words seem to me to be capable also of a different and more practical meaning related not to title, legal or equitable, but to lawful possession and control with the use and benefit which are derived from them. If that meaning were right, a ship would be beneficially owned by a person who, whether he was the legal or equitable owner or not, lawfully had full possession and control of her, and, by virtue of such possession and control, had all the benefit and use of her which a legal or equitable owner would ordinarily have." Furthermore, the question as to whether the concept of ownership of a ship which has been introduced in 18th Century when there had been no joint stock companies and the concept of shares in a ship so as to encourage the individuals to pool their resources by a sister ship so that they may become co-owners is a matter which is required to be considered at an appropriate stage. We do not think that such a question can justifiably be gone into at this stage. We do not intend to delve deep into the questions as to whether the two ships named hereinabove are the sister ships of the respondent No. 1 Vessel or whether the requirement of law as regard ownership of a ship in the Respondent No. 1 as beneficial owner has been fulfilled or not. Such issues must be considered at an appropriate stage. CONCLUSION :

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Some countries like Canada, Australia and South Africa as well as communist regimes like China and Korea have made statutes as a result whereof the maritime claims stand codified. The expression necessaries is not used in the said statutes except the statutes of United States. The domestic legislation indisputably will prevail over any international convention irrespective of the fact as to whether the country concerned is a party thereto or not.The rules for ship arrest in international fora are not uniform. Despite International Convention on the Arrest of Sea-going Ships 1952 as amended in the year 1999 either having been adopted by some countries or adopted by others, the law is enforced by the concerned countries having regard to their own domestic legal system. Where, how and when can a maritime claimant most advisedly arrest a ship in pursuit of its claim either in rem or in personem had all along been a complicated question keeping in view the principles of lex fori.As a matter of policy legislation or otherwise England did not want that arrears of insurance premium should be included as a maritime claim, but the same would not imply that in other countries despite the unpaid insurance premium being maritime claim, the same would not beregard to the changing scenario and keeping in tune with the changes in both domestic and international law as also the statutes adopted by several countries, a stand, however, bold, may have to be taken that unpaid insurance premium of P&I Club would come within the purview of the expression "Necessaries supplied to any ship". Other types of insurance, keeping in view the existing statutes may not amount to a "necessary". In any event, such a question, we are not called upon to answer at present. The discussions made hereinbefore under different sub-titles of this judgment separately and distinctly may not lead us to the said conclusion but the cumulative effect of the findings thereunder makes the conclusion inevitable. The question has not only been considered from the angle of history of the judicial decisions rendered by different Courts having great persuasive value but also from the angle that with the change in time interpretative changes are required to be made. We, therefore, in agreement with the judgment of the Bombay High Court, hold that unpaid insurance premium being a maritime claim would be enforceable inapproach of the High Court, in our considered opinion, is not correct. For the purpose of rejecting a plaint it is not necessary to consider whether the averments made in the plaint prove the factum that the defendant No. 1 "Sea Success-I" is a sister ship of "Sea Glory" and "Sea Ranger" or the said two ships are beneficially owned by the defendant No. 2. The reasons which have been assigned in support of the said aforementioned finding that that the ship is a valuable commercial chattel and her arrest undeservingly prejudices third parties as well as affect the interest of owner and others is a question which must be gone into when passing a final order as regard interim arrest of ship or otherwise. For the aforementioned purpose the Vessel herein could file an application for vacation of stay. While considering such an application, the Court was entitled to consider not only a prima facie case but also the elements of balance of convenience and irreparable injury involved in the matter. In such a situation and particularly when both the parties disclose their documents which are in their possession, the Court would be in a position to ascertain even prima facie as to whetherthe Club has been able to make out that "Sea Glory" and "Sea Ranger" are sister vessels of the"Vessel".The reason for the aforementioned conclusion is that if a legal question is raised by the defendant in the written statement, it does not mean that the same has to be decided only by way of an application under Order 7 Rule 11 of the Code of Civil Procedure which may amount to pre-judging the matter.