The plaintiffs brought three admiralty actions against the owners of the Jian She 33 and the Jian She 32 for cargo misdelivery. On 27 October 2000, China Shipping (HK) Holdings Co Ltd (the caveator) entered a caveat against arrest. The schedule listed 172 vessels, including the Jian She 32, the Jian She 33, and the Xiang Lian. The plaintiff noted the caveat and served the writ of summons on the owners of the Jian She 33. On 11 January 2001, the owners of the Jian She 33 acknowledged service of the writ and the caveator furnished a bail bond of USD 1 million. However, only the words 'The Owners of the Ship or Vessel Jian She 33' were inserted under the 'description of the defendant' in the acknowledgement. They did not describe the defendant as the demise charterer of the Jian She 33. On the same day, the caveator withdrew the original caveat and re-entered a new caveat that did not include the Xiang Lian in the schedule.

The caveator and owners of the Jian She 32 and the Jian She 33 contended that the original caveat, the acknowledgement and the bail bond did not cover the liability of the demise charterer of the Jian She 33 and the Jian She 32, China Shipping Development Ltd.

The plaintiffs argued for a liberal and wide construction for the word 'owners' appearing twice in the caveat to include demise charterers. The purpose of a caveat was to prevent the arrest of a ship, and a narrow construction might not achieve this purpose. Demise charterers had the characteristics of owners - possession, control and use of the ship - and were often taken as temporary owners. This view was also shared by Brandon J in The Andrea Ursula [1973] 1 QB 265. The plaintiffs also contended that the Xiang Lian was beneficially owned by the demise charterer and so the wording of the caveat was sufficiently wide to include the demise charterer.

The defendants submitted that the word 'owners' in the original caveat did not include demise charterers, based on the context of the admiralty jurisdiction in rem under s 12B(4) of the High Court Ordinance (Cap 4) (HCO). The distinction drawn between owners and demise charterers was clear.

Held: Application dismissed.

There was no admiralty in rem jurisdiction against the vessels' owners as opposed to the demise charterers. The lodged bail bond was ordered to be returned to the caveator.

The two possible subjects of admiralty arrest or action in rem are against: (1) the owner where a ship is arrested for the liability of the beneficial owners or owners; and (2) the demise charterer where a ship is arrested for the liability of the demise charterers. In The I Congreso del Partido [1978] 1 QB 500, 542, Robert Goff J departed from The Andrea Ursula and concluded that, notwithstanding the original intention of Arrest Convention 1952, the words 'beneficial owners as respects all the shares therein' could not include demise charterers. Demise charterers were also not included in that expression of beneficial owners of the ship as respects all the shares therein. This decision resulted in the introduction of s 21(4)(i) of the Senior Courts Act 1981 (UK). Hong Kong followed suit with an amendment to s 12B(4)(i) of the HCO in 1989. These provisions refer to the owner as the 'beneficial owner of that ship as respects all the share in it', and the demise charterer as 'charterer of it under a charter by demise'.

The word 'owners' in the acknowledgement and bail bond did not include the demise charterers of the vessels. The title of the action appearing on these two documents drew a clear division between owners and demise charterers. The same word 'owners' should be given the same meaning ie beneficial owners of the vessels in all three documents. There was no scope for a wide construction having regard to the context in which the caveat had been entered. The caveat was given for and on behalf only of the owners to cover the liability of the owners and not for and on behalf of the demise charterer for the liability of the demise charterer. The demise charterer had an obligation under the demise charter to ensure that it took care of the liability for cargo and that the vessel was not detained in relation to such liability of the demise charterer. The alternative case of the plaintiffs based on the Xiang Lian in relation to the other action also failed. The replacement of the original caveat with the new caveat removed the basis for this argument.