Darby International Investments v Rong Tai International Shipping
Darby International Investment Ltd v Rong Tai International Shipping Ltd
Hong Kong Court of First Instance: Deputy High Court Judge B Chu: HCMP1438 of 2013: 2 December 2013
Mr Osmond Lam and Derek J Y Chan, instructed by ONC Lawyers, for the plaintiff
Mr Ken T C Lee, instructed by Tsui & Co, for the defendant
MARITIME LAW: REGISTRATION OF VESSELS: VESSEL APPARENTLY REGISTERED IN MORE THAN ONE JURISDICTION: DECLARATION AS TO VALIDITY OF REGISTRATION IN HONG KONG: PURPOSE OF GRANTING DECLARATION
The plaintiff sued the defendant in the PRC over a mortgage of a vessel (the Vessel). While the Vessel was registered in Hong Kong, it was subsequently discovered that a vessel of the same name was registered with the maritime authorities in the PRC and was subject to a mortgage in favour of another mortgagee. The PRC Court requested the parties to submit the original registration documents of the Vessel in Hong Kong for review. Upon an application by the plaintiff, the Hong Kong Court of First Instance granted declarations to the effect that the registrations of the Vessel and the mortgage in favour of the plaintiff kept at the Hong Kong Registry of Ships by the Hong Kong Marine Department were valid.
This note has been contributed by Ken T.C. Lee, LLB(Hons), PCLL (University of Hong Kong), BCL(Oxon) and barrister-at-law in Hong Kong. This note is prepared solely on the basis of the judgment published by the court and contains no confidential or privileged information.
The defendant was a Hong Kong company, and Zhejiang Jiaolong Group Co Ltd (Zhejiang Jiaolong) was one of its shareholders.
In January 2012, the plaintiff and the defendant entered into an agreement (the Agreement) under which the plaintiff advanced a loan to the defendant. The defendant also purported to grant a mortgage (the Mortgage) to the plaintiff over M.V. “Rong Ming” (the Vessel).
At the time of the Agreement, the plaintiff was provided with a copy of the Transcript of Register dated 18 January 2012 issued by the Hong Kong Marine Department (the Department). It contained the registration of the Vessel with the Department (IMO No 9557630). It also showed that the defendant was the 100% owner of the Vessel and that the Vessel was unencumbered.
The defendant subsequently defaulted in repayment of the loan under the Agreement. Upon the plaintiff’s instructions, the Vessel was arrested by the maritime authorities in Ningbo, People’s Republic of China (PRC). In December 2012, the plaintiff commenced legal proceedings (the PRC Action) against the defendant in the PRC (the PRC Court).
In May 2013, the Bank of China, Ningbo Branch commenced action (the BOC Action) in Ningbo against China Electronic Import and Export Corporation Ningbo Branch (CEIEC) and Zhejiang Jiaolong for various loans. The loans were secured by a mortgage dated 30 September 2010 (the BOC Mortgage) of a vessel also with the name “Rong Ming”. The vessel was registered in the PRC with a registration number 070308000601 and was shown to have been acquired by Zhejiang Jiaolong in 2008. There were some discrepancies in the description of the vessel from that in the registration of the Vessel in Hong Kong.
Upon its application, CEIEC was allowed to join in the PRC Action as the vessel under the BOC Mortgage might indeed have been the Vessel.
The PRC Court apparently requested the plaintiff to obtain and submit for review the relevant original registration information and documents of the Vessel under the name of the defendant in the Department.
In June 2013, the plaintiff issued the present proceedings. By way of an order for discovery against the Department, the plaintiff obtained certified copies of an Application Form for Registration of the Vessel, a Declaration of Entitlement to Own a Ship Registered, a Builder’s Certificate, a Certificate of Survey and a Certificate or Declaration of Marking.
The plaintiff sought declarations from the Court that the registrations of the Vessel and the Mortgage at the Hong Kong Registry of Ships kept by the Department were valid, subsisting and enforceable under the Merchant Shipping (Registration) Ordinance (the Ordinance) (Laws of Hong Kong, Cap.415).
The Court allowed the plaintiff’s application.
The Court observed that under Order.15, Rule.6 of the Rules of the High Court (Laws of Hong Kong, Cap.4A), a party may seek a declaration in an action without obtaining other or further relief. Declaratory relief should not be granted where the issue is academic. Further, a declaration should only be granted when persons whose right would be affected by the grant of declaration were before the Court so that they could be heard: see London Passenger Transport Board v Moscrop  AC 332.
The Court was of the view that discretion should be exercised in favour of granting the declarations. The declarations sought were only limited to the narrow issue of whether the registrations of the Vessel and the Mortgage were valid under the Ordinance as at their respective date of registration. The documents produced by the Department were certified true copies. The declarations would not limit the ability of the PRC Court to make a finding on the real ownership of the Vessel or the priority of mortgages if it were to be eventually found that different owners and multiple mortgages had been registered in different jurisdictions in respect of the same vessel. It was not clear whether the PRC Court indeed required the originals or whether certified true copies from the Department would be acceptable to the PRC Court.
No challenge was made against the validity and accuracy of the registrations in Hong Kong. While the defendant submitted all the original documents to the Department, there was no evidence from the defendant to clarify whether the registrations with the maritime authorities in Hong Kong and the PRC related to the same vessel or different vessels.
Parties in the BOC Action appeared to be aware of the PRC Action and the present proceedings, but apart from CEIEC, did not seem to have applied to join in the PRC Action. There was no sufficient reason as to why any of the other parties needed to be joined in the present proceedings.