This judgment was concerned with the interaction between the jurisdiction of the Admiralty Court in Hong Kong and the Singapore voluntary winding up proceedings of companies owning various ships. There were four ships in question:

1. Convenience Container
2. Kingdom Container
3. Liberty Container
4. Mandarin Container

All four ships were owned by Powick Marine (S) Pte Ltd, a Singapore company (Powick). As a result of the collapse of Powick, the four ships were arrested in Hong Kong and sold by the Admiralty Court.

The plaintiffs in this action were International Transportation Services Ltd (ITS), who were stevedores, and Rudolf A Oetker KG (Oetker) the charterer of the ships. The ships were not arrested by the plaintiffs. Rather, other claimants had done so.

Powick sought the setting aside of the writs in each of the Oetker actions based on the contention that the requirement of s 12B(4)(i) of the High Court Ordinance were not satisfied.

Held: Action dismissed.

Section 12B of the High Court Ordinance provides:

(4) In the case of any such claim as is mentioned in s 12A(2)(e) to (q), where -

(a) the claim arises in connection with a ship; and

(b) the person who would be liable on the claim in an action in personam ('the relevant person') was, when the cause of action, the owner or charterer of, or in possession or in control of, the ship, an action in rem may (whether or not the claim gives rise to a maritime lien on that ship) be brough in the Court of First Instance against -

(i) that ship, if at the time when the action is brought the relevant person is either the beneficial owner as respects all the shares in it.

First, Powick objected to the in rem jurisdiction on the basis that the effect of the winding up in Singapore divested Powick of beneficial ownership of the ships. Second, upon the sale of the ships by the Court, the beneficial ownership of the ships passed to the purchasers so that Powick was no longer the beneficial owner of the ships at the time when the writs were issued.

The starting point is the construction of the expression 'beneficial owner' in s 12B(4)(i). The Hong Kong s 12 of the High Court Ordinance is derived from the Supreme Court Act 1981 (UK), which substantially re-enacted the Administration of Justice Act 1956 (UK), which was in turn was brought into force as a purported adoption of the Arrest Convention 1952.

The history of how the admiralty jurisdiction has expanded as result of the Convention and the subsequent 1956 Act is well known. By the 1956 Act, admiralty in rem jurisdiction is greatly expanded. It is available not only in cases of maritime lien (collision, salvage, wages etc) or in cases of statutory tights of action in rem, but also extends to sister ships. That is how and why it became necessary in the 1956 Act to spell out the scope of such jurisdiction. The jurisdiction is defined by four factors:

1. the type of claim (eg cargo, crew, charterparty, necessaries);
2. connection between the claim and the ship;
3. the person liable for such claim must be the owner of the ship at the time of the incident or cause of action; and
4. the person liable for such claim must also be the owner of that ship (or another ship, commonly known as sister ship) at the time the action is brought.

The double requirement of (c) and (d) above is to ensure that there has been no change of ownership from the time of the incident to the time of the claim. If there is a genuine change of ownership, then the admiralty claim in rem does not run against the ship or its new owner (maritime liens cases always excepted). It is against this background that the words 'beneficial owner' were put into the requirement of (d) above.

The argument is that once the ship has been sold by the Court, the requirement of s 12B(4)(i) cannot be met because when the action is brought (namely at the time of the issue of the writ) Powick was not the beneficial owner of the ship (as the ship has been sold by the Court). That would be the result of a literal reading of s 12B(4)(i). But a proper construction would require that provision to be understood and construed in its proper context, namely that maritime claims are brought by different claimants at different times against a ship, both before as well as after sale, and that the proceeds of sale have always been regarded in admiralty as standing in for the ship. It is therefore possible to read s 12B(4)(i) as referring 'ship' to 'proceeds of sale of the ship' (notwithstanding that 'proceeds of the sale of ship' is not in the definition of ship and there is other reference in the Ordinance to proceeds of sale of ship). In such case of reading 'ship' as referring to 'proceeds of sale of ship', then s 12B(4)(i) makes perfect sense when there is a claim brought against the proceeds of sale of a ship. The owner of a ship like Powick would be the beneficial owner of the proceeds of sale, especially in a situation when the sale was pendente lite. The proceeds of sale of a ship belongs to the defendant owner and when all claims in rem against the ship fail, those proceeds of sale are returned to their rightful owner, the defendant. When some of the claims succeed, say, resulting in two judgments, then part of the proceeds are required to be paid out on behalf of the defendant owner to the successful plaintiffs on the judgment/creditors. The balance will be given back to the defendant owner. The unity of title of the asset of the defendant owner therefore remains the same at all times in the defendant owner:

1. at the time of accident or accrual of cause of action;
2. at the time of liquidation;
3. at the time of issue of writ (before or after liquidation) and;
4. at the time of sale of ship and after the sale of ship.

The admiralty jurisdiction requirement is therefore matched by the admiralty practice.