On 20 September 2001, 10 containers fell into the sea from the Tian Xiang 2 Hao. A further seven containers and their contents were also found to be damaged. Guangzhou Maritime Rescue and Salvage Bureau was the registered owner of the Chinese-flagged Tian Xiang 2 Hao.

Jungjin Shipping Co Ltd (the plaintiff) claimed indemnity or contribution for loss of or damage to this consignment of 17 containers. The writ was issued on 13 November 2001 and amended on 15 November 2001. The Tian Xiang 2 Hao was arrested in Hong Kong on 4 December 2001. Ince & Co, acting for Tian Xiang Warehousing & Transportation Co Ltd (Tian Xiang), filed an acknowledgement of service on 13 December 2001, naming 'Tian Xiang 2 Hao (PRC Flag)' as the defendant.

The plaintiff applied for orders that: (1) the acknowledgment of service be struck out or set aside on the ground that Ince & Co had no authority to act for the first defendant; and (2) the plaintiff's costs be paid by Ince & Co. The question for the Court was whether Tian Xiang, who claimed to be the beneficial owner of the Tian Xiang 2 Hao, was entitled to acknowledge service of the writ.

Held: (1) The acknowledgement was set aside; (2) The plaintiff's application for Ince & Co to pay its costs was dismissed.

The Judge adopted the analysis of Zulkefli J in Kawasaki Kisen Kaisha Ltd v Owners of the Ship or Vessel 'Able Lieutenant' [2002] 6 MLJ 433 (CMI303). Zulkefli J's starting point was that registration of ownership was virtually conclusive of the legal and beneficial ownership of a ship. He explained the rationale for this (paras 447H-I):

I am of the view that the law places the burden on the plaintiff to prove beneficial ownership of a registered ship only in those cases when the defendant is not the registered owner at the time when the action is brought and the vessel arrested. In all other cases, the said UK Act enacted to give effect to the Arrest Convention 1952, follows the ship register. Considering there is no public register for beneficial ownership of ships, if the view of the law by Pan Ocean and the defendant is to hold, then all maritime nations might as well close down their shipping registries. The provisions for registration in our Merchant Shipping Ordinance 1952 would then appear to have no regulatory purpose. Also, the Arrest Convention 1952 which is only concerned with legal ownership, would have no effect. For these reasons, it is my view that the law cannot be as stated by Pan Ocean and the defendant.

Zulkefli J then examined different types of arrest situations at paras 448G-449E:

It can be said that there are three rights of ship arrest provided for by s 21(4) of the UK Act. Firstly, it is the arrest of the particular ship (category 1), secondly, arrest of the sister ship (category 2) and thirdly, arrest of a particular ship spirited away into a different legal ownership (category 3). In the case of categories 1 and 2, it is my view that the burden of proof is on the plaintiff to show that the defendant is the registered owner of the vessel when the writ is issued. This follows the Arrest Convention 1952 where only legal ownership matters.

The relevant Convention articles were arts 3.1 and 3.2:

3.1: Subject to the provisions of para. (4) of this article and of article 10, a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sail; but no ship, other than the particular ship in respect of which the claim arose, may be arrested in respect of any of the maritime claims enumerated in article 1, (o), (p) or (q).

3.2: Ships shall be deemed to be in the same ownership when all the shares therein are owned by the same person or persons.

The circumstances in the present suit constituted a 'category 1' situation. In taking out the writ and warrant of arrest, the plaintiff was entitled to treat the Guangzhou Maritime Rescue and Salvage Bureau's registration at the time of the cause of action as evidencing compliance with the High Court Ordinance and that continued registration at the time when the writ was issued as 'virtually conclusive' evidence of the ship's beneficial ownership.