This was an appeal by Lee Chung Shun (the intervener), who carried on business under the name of Garful Maritime Co, from an order made by Cruden DJ on 11 August 1988. In substance, the intervener complained of the Judge's refusal to set aside the writ in rem issued on 29 July for want of jurisdiction. The propriety of the warrant of arrest of the MV Rolita issued on 21 August was also raised in this appeal.

By art 3 of the Admiralty Jurisdiction (Hong Kong) Order 1985, s 21 of the Supreme Court Act 1981 (UK) (the Act) was extended to Hong Kong.

Kingstar Shipping Ltd (the plaintiff) claimed damages for breach of an agreement between itself and Worldlink Shipping Lines Co SA (Worldlink). Worldlink agreed on behalf of itself or its nominee, the intervener, to charter the Rolita to the plaintiff. The plaintiff claimed for the losses suffered by it due to the breach of this agreement. The plaintiff contended that, if Worldlink was still the beneficial owner of the Rolita on 29 July, Worldlink was liable to it in personam for damages for breach of the charterparty. Worldlink could also be found liable for being the owner or charterer or in possession or control of the ship when the cause of action for such breach arose. The plaintiff further contended in the alternative that if the intervener was the beneficial owner on 29 July, then it would be found liable to the respondent in personam. The intervener could also be found liable for being the owner or charterer or in possession or control of the ship when the cause of action for breach of the charterparty arose.

In the instant case, the intervener affirmed that it, rather than Wordlink, was the beneficial owner of the vessel on 29 July, which, in the plaintiff's case, was not only the date when the cause of action arose but also 'the time when the action was brought' within the meaning of s 21(4) of the Act. It was common ground that 'the claim arises in connection with a ship' according to s 21(4)(a). According to s 21(4)(b), the only way in which jurisdiction can be challenged, therefore, was on the basis that the intervener would not 'be liable on the claim in an action in personam'.

Held: Appeal dismissed.

The construction of the wording in s 21(4)(b) is essential.

According to The St Elefterio [1957] P 179, 'The words used ... are "the person who would be liable" not "the person who is liable", and it seems to me, bearing in mind the purpose of the Act, that the natural construction of those quite simple words is that they mean the person who would be liable on the assumption that the action succeeds'.

The intervener argues that s 20(2)(h) of the Act postulates the need for the plaintiff to satisfy the Court that an agreement relating to the use or hire of a ship was indeed concluded, the St Elefterio approach being confined to the allegations of breach and damages. The Court is unable to construe that subsection, read together with the words 'the person who would be liable on the claim in an action in personam' in s 21(4)(b) in that way. Reference to the Arrest Convention 1952, permissible in the event of ambiguity as pointed out in Samick Lines v Owners of Antonis P Lemos [1985] AC 711 (CMI2212), does not persuade the Court otherwise.

Looking at s 20(2)(f) of the Act contrasted with the simpler terms of s 20(2)(h), it would be impossible to contend that an appropriate combination of these various alternatives must be established to the satisfaction of the Court if the admiralty jurisdiction is subject to challenge. Thus, in relation to s 20(2)(h), where the expression is 'any claim arising out of any agreement relating to ... the use or hire of a ship', the word 'claim' must embrace the whole. The fact that a claim is made resulting from an alleged breach of an alleged agreement of the nature required suffices. To summarise, s 21(4)(b) should be construed to read: 'The person who would be liable on the claim in an action in personam ("the relevant person") arising out of an alleged agreement relating to the use or hire of a ship was, when the cause of action ...'.

The St Elefterio approach covers the agreement and the breach, the establishment of the cause of action and damages.

In the light of what may be described as a broad construction of ss 20(2)(h) and 21(4) of the Act, the appeal is dismissed.