IMSML Website Article 18/2024: FIMBank Plc v The Owners and/or Demise Charterer Ship or Vessel now known as ‘Bao Lai’ [2023] 6 MLJ 563 (FC) - Extension of Writs in Rem Pursuant to the Inherent Jurisdiction of a Court

This appeal was heard by a Federal Court bench at Putrajaya that consisted of Nallini Pathmanathan, Mary Lim and Rhodzariah Bujang FCJJ.

The P’s maritime claim arose in this case when there was delivery without production of a bill of lading to unauthorised third parties by the carrier. It is trite law that delivery of goods by a carrier must be made against the production of a bill of lading by a consignee. In order to enforce a claim for breach of the contract of carriage, the P attempted to arrest the carrier’s offending vessel by taking out a writ in rem. This writ in rem could be served on the ship if she entered into Malaysian territorial waters.

The writ in rem was renewed for five times, but the carrier’s Vessel did not enter Malaysian territorial waters. So the write in rem was never served. Both the High Court and the Court of Appeal held that the writ in rem could not be renewed for a sixth time. The clear words of Order 6, Rule 7(2) of the Rules of Court 2012 did not allow renewal for a sixth time and beyond. Both courts took the view that there was no lacuna in the law which allowed resort to a court’s inherent power to allow the extension of the writ in rem beyond five times.

The Rationale for Restricting Renewals of Writs

Arguing that the Federal Court’s inherent jurisdiction was restricted was clearly like putting a silky satin red capote before a bull. The bull would not stand for it !!! The Federal Court started by examining the object and purpose of Rules of Court 2012, Order 6, Rule 7(2A), which was in pari materia with the previous Rules of the High Court, Order 6, Rule 7(2A). The Federal Court noted that the particular rule 'was introduced to prevent abuse by the plaintiffs in filing writs and sleeping on them without making efforts to serve them. This practice of inactivity is something which the courts loathe. It is against the administration of justice. It creates a backlog and results in a false number of pending cases. ... [The Rule] must be strictly enforced as required by the rule', see Duli Yang Amat Mulia Tunku Ibrahim Ismail Ibni Sultan Iskandar Al-Haj Tunku Mahkota Johor v Datuk Captain Hamzah bin Mohd Noor and Another Appeal [2009] 4 MLJ 149 per Zaki Azmi CJ.

The Primacy of Order 70

Order 6, Rule 7, is still subject to Order 70, which is the primary provision that govern admiralty causes and matters. As Order 70, Rule 1 stipulates that 'other provisions of these Rules apply to ... provisions of this order', the Federal Court held that Order 70 would always prevail in the event that it conflicts with any other rule', see Para [22]. Therefore, Order 6, Rule 7(2) cannot logically be read to impose a five time renewal limit for the writ in rem when the Vessel does not enter jurisdiction, and the service cannot be effected on the Vessel as required by Order 70, see Para [23].

The Provisio and the Adoption of a Purposive Interpretation

There is a Proviso in Order 6, Rule 7(2). It provides for the instance when 'efforts to serve a writ on a defendant have been unsuccessful'. The Federal Court held that, if the defendant vessel never enters Malaysian waters, there is no opportunity for the plaintiff to make 'effort' to serve its writ in rem. In the context if admiralty claims, Order 6, Rule 7(2), is to guard against indolent litigants who fail to take serious steps to serve a writ in rem on a defendant vessel that is within jurisdiction.

Therefore, the Federal Court made it clear that Order 6, Rule 7(2), requires a purposive reading. Extension of the writ in rem should only be refused when no serious attempt has been made by the plaintiff to serve the writ when the defendant vessel comes into Malaysian territorial waters, see Para [25] adopting the rationale in Societe Generale v The Owners and/or Demise Charterer of and/or Other Persons Interested In The Ship or Vessel 'Maple' [2018] MLJU 889 which applied to a situation where a plaintiff failed to effect the service of an admiralty writ in rem when the vessel did in fact enter Malaysian waters.

The Federal Court made it clear that the purpose and object of Order 6, Rule 7(2) is to ensure the prompt service of a writ on a defendant. The Rules do not cater for situations where it is impossible for a plaintiff to effect personal service of an admiralty write in rem, see Para [27].

The Statutory Right In Rem

This statutory right crystallises upon issuance of the writ in rem, and confers in the plaintiff the status of a secured creditor. The Federal Court cited well known cases such as In Re Aro Co Ltd [1980] Ch 196; The Hull 308; Deutz Mwm Far East (Pte) Ltd v Owners of and other persons interested the ship or Vessel 'Hull No 308' (Standard Chartered Bank, interveners) [1991] 3 MLJ 393 in support of this fundamental statement of the law. Relying on The Monica S [1968] 2 WLR 431, the Federal Court also held that this statutory right in rem cannot be defeated by a subsequent change in ownership of the res, even where the writ in rem has not been served, see Para [36].

On the facts of the FIMBank plc case, the ownership of the 'Bao Lai' had changed three (3) times since the issuance of the writ in rem. The Federal Court held that Order 6, Rule 7(2) cannot be used to defeat FIMBank's statutory right of action which had been brought within time. Further, Order 6, Rule 7(2), which is subsidiary legislation, cannot eradicate or annihilate a statutory right of action which accrued within the limitation period, see Para [37].

On the facts of the case, FIMBank has not slept on the writ in rem. In reality, FIMBank diligently monitored the movements of the Vessel throughout the validity of the writ. The non-arrival of the Vessel into Malaysian waters, making the serving of the writ an impossibility, could not be blamed on FIMBank, see Para [39]. The purpose of the Rules is to facilitate the administration of justice, not incapacitate it. There would be manifest injustice by not allowing the renewal of the writ in rem, diverges from the purpose of the Rules and punishes a diligent litigant, see Para [40].

The Inherent Powers of the Court

Both the High Court and the Court of Appeal in the FIMBank case held that pursuant to Order 92, Rule 4, the Rules should only be invoked when there was a lacuna in the Rules, citing Yomeishu Seizo Co Ltd and Others v Sinma Medical Products (M) Sdn Bhd [1996] 2 MLJ 334, see Para [41]. The Federal Court, however, held that the proposition in the Yomeishu case cannot be read to confine a court's inherent jurisdiction in that manner. The Federal Court took the view that a mere absence of a lacuna in the law cannot, on its own, fetter the court's exercise of its inherent powers.

In adopting this position, the Federal Court cited two cases. The first judgment was that of Augustine Paul JC (as he then was) Ho Yoke Kwei and Another v Ong Eng Hin [1997] 4 MLJ where his Lordship held that the 'inherent power of the court is not confined to merely filling the gaps in the rules but extends to mould remedies where no provision is made for them in the rules', see Para [42]. The second was the Supreme Court in Permodalan MDF Sdn Bhd v Tan Sri Datuk Seri Hamzah bin Abu Samah and Others [1988] 1 MLJ 178 where it held that the Rules 'cannot interfere with the exercise of inherent power by the court so long as it deems it necessary to prevent any injustice or abuse of its own process', see Para [43].

Both the High Court and the Court of Appeal had held that there was no lacuna in the Rules. The Federal Court held that, with respect, this view is flawed and incorrect. The Federal Court explained that the lack of a lacuna necessarily indicates the availability of alternative remedies to an aggrieved litigant. On the facts of the case, no such alternative remedy was available to FIMBank, see Para [44] where the Federal Court cited Arab-Malaysian Credit Bhd v Tan Seang Meng [1995] 1 MLJ 525.

Role of the Rules Committee

In 2000, the Rules Committee introduced an amendment to Order 6, Rule 7 of the Rules of the High Court 1980 to limit the number of times a writ could be renewed, in particular, a maximum of five renewals for admiralty writs. However this does not limit a court from exercising its inherent powers to extend the validity of an admiralty writ beyond a fifth time to prevent injustice to a litigant, see Para [49].

The Federal Court held that the High Court and Court of Appeal did not appreciate the practical difficulties faced by the plaintiffs in effecting service of a writ in rem where the Vessel never sails into Malaysian waters. If there is a cap on renewals, this would incentivise owners of a vessel to evade liability by keeping the vessel out of jurisdiction until the limitation period for a claim expires, see Para [50].

The Federal Court respectfully advised the Rules Committee to consider amending Order 6, Rule 7(2), by removing the cap on renewals for an admiralty writ in rem. This would prevent unjust situations such as that involving the 'Bao Lai' in this case, and keep Malaysia's laws in line with the laws of other jurisdictions, see Para [51].

Note, for those interested in reading about the Federal Court's review of the laws in other jurisdictions, please refer to Para [28] to [35].

Anonymity and Redaction of Documentary Details

Even though the Federal Court allowed the renewal of the writ in rem beyond a fifth time under its inherent jurisdiction, it refused to details about the ship or cargo to be anonymised or stated as generically as possible. FIMBank had sought this order to prevent alerting the shipowner about the writ in rem and thus avoid Malaysian jurisdiction. FIMBank had also pointed out that this anonymity would also be necessary to protect arbitral confidentiality as the arrest of the shipowner was to obtain security for an award made in the arbitral proceedings, see Para [51] to [53].

The Federal Court held that there were no compelling circumstances to grant such an order. Those are concerns present with any claims in rem against a Vessel. The facts of this appeal are not extraordinary and do not warrant such redactions, see Para [54].

Thank you for reading IMSML Website Article 18/2024

Stay tuned for the next IMSML Website Article 19/2024: PBJV Group Sdn Bhd v Asian Kaliber Sdn Bhd & Ors (Synergy Marine (N) Sdn Bhd & Anor, Third Parties) [2023] MLJU 2493

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); LL.M (Cardiff); Ph.D (Cardiff); CMILT

Professor of Maritime and Transport Law

Head of the Centre for Advocacy and Dispute Resolution

Faculty of Law

Universiti Teknologi MARA Shah Alam

Selangor, Malaysia

Thursday,  29 February 2024

Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my