On 19 June 1993 Shanghai Hai Xing Shipping Co Ltd (the respondent) commenced an action in rem in the High Court, Sandakan, for loss and damage to their vessel the MV Xin Hua 10 caused by a collision while at anchorage in the port of Shanghai. The appellant’s barge (Fordeco No 12) had collided with the MV Xin Hua 10 while being towed by the appellant’s tug (Fordeco No 17).

The respondent indorsed the writ to claim that the loss and damage to the MV Xin Hua 10 was caused by the negligence of the appellant, its servants or agents. On 24 June 1993, the appellant served the writ of summons on both the Fordeco No 12 and the Fordeco No 17. Consequently, both vessels were arrested pursuant to a warrant of arrest dated 22 June 1993. On 13 July 1993, the appellant entered an unconditional appearance and one month later, on 13 August 1993, the respondent lodged its preliminary act. The appellant lodged its preliminary act on 20 September 1993, seven days after the prescribed period in the Rules of the High Court 1980 (RHC). On 21 September 1993, the respondent successfully applied for a judgment in default against the defendant for failing to lodge its preliminary act within the prescribed period.

On 8 November 1994, the appellant appealed to the Court of Appeal, which agreed with the High Court judge that the respondent did not need to prove that its claim was well-founded and was entitled to judgment unless the appellant could give a satisfactory explanation for failing to lodge its preliminary act within time. The appellant argued that the reason for the delay was the respondent’s failure or refusal to provide documents requested by the appellant, but the Court of Appeal held that this was not a ground to file the preliminary act late.

The appellant appealed. There were two questions of law for the court to decide:

1. Whether the admiralty jurisdiction of the High Court in Malaya and Sabah and Sarawak can be validly invoked when the plaintiff has issued and served a writ in rem and warrant of arrest against two vessels owned by a defendant in respect of the same claim.

2. Whether on the hearing of a motion for judgment against a defendant for failure to lodge a preliminary act under O 70 r 18(3) of the RHC and the defendant appears, the plaintiff is required to satisfy the court that his claim is well-founded before the court gives judgment for the claim.

Held: Appeal allowed. The admiralty jurisdiction of the High Court of Sabah and Sarawak is governed by the UK Supreme Court Act 1981 by virtue of s 24(b) of the Courts of Judicature Act 1964. It is settled law that when a plaintiff brings an action in rem, the jurisdiction of the High Court is invoked when the writ is served and warrant of arrest executed on one of the named ships. Therefore, a plaintiff is limited to serving the writ on any one of the defendant’s ships and arresting it. It does not prevent the writ from naming more than one ship or two or more writs each naming a different ship. In this case, the respondent was permitted to issue the writ in rem against the owners of both vessels Fordeco No 12 and Fordeco No 17 but they could not serve the writ on both vessels and arrest them.

The decision of Lane J in The Banco [1970] 2 Lloyd's Rep 230, affirmed by the Court of Appeal, is of assistance. In that case, the plaintiff’s motor vessel Monte Ulia allided with a jetty on the River Thames. The plaintiff alleged that the allision was caused by the negligent navigation or management of the defendant’s motor tanker, the Banco. The plaintiff issued a writ in rem against the defendant and arrested seven vessels owned by the defendant, including the Banco. Lane J referred to the Arrest Convention 1952 and held that a plaintiff may only arrest one ship of the defendant, which might be the offending ship or, alternatively, any other ship in like ownership.

Therefore, the service of the writ in rem on the vessel Fordeco No 12 is set aside and the warrant of arrest is discharged. The action against the offending vessel Fordeco No 17 should proceed.

On the second question, the High Court judge misdirected himself by not considering the respondent’s preliminary act and affidavit to satisfy himself that the respondent had proved its case and that the claim was well-founded before giving judgment against the appellant. Where in an action in rem, a defendant fails to file its preliminary act within the prescribed period and the plaintiff applies for judgment in default against the defendant the following applies:

1. If the defendant does not appear, the plaintiff must prove its case and the court shall order the preliminary act to be opened and require the plaintiff to prove the claim is well-founded. The plaintiff may rely on its affidavit.

2. If the defendant does appear, the court must be satisfied that the claim is well-founded either by ordering the opening of their preliminary act or by considering the plaintiff’s affidavit before the court grants judgment.