THE HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED PEMUNYA DAN/ATAU PENCARTER DEMIS DAN/ATAU ORANG LAIN YANG BERKEPENTINGAN DALAM KAPAL OCEAN WINNER (IMO NO. 9242479) DARI PELABUHAN SINGAPURA PENCELAH 1. ) BANK OF AMERICA NATIONAL ASSOC

WA-27NCC-52-06/2020 Kand. 246 08/08/2022 12:25:21 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA (COMMERCIAL DIVISION) ADMIRALTY ACTION IN REM NO.: WA-27NCC-52-06/2020 Admiralty in rem action against the ship “OCEAN WINNER” (IMO No. 9242479) of the Port of Singapore. BETWEEN THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED (Singapore UEN No. S16FC0010A) ... PLAINTIFF AND The Owners and/or the Demise Charterers of, and/or other persons interested in the ship “OCEAN WINNER” …DEFENDANT (IMO No. 9242479) of the Port of Singapore AND 1. BANK OF AMERICA, NATIONAL ASSOCIATION (Singapore UEN No. S63FC1518C) 2. PETROCHINA INTERNATIONAL (SINGAPORE) PTE LTD (Singapore UEN No.: 200413294G) 3. SUMITOMO MITSUI BANKING CORPORATION SINGAPORE BRANCH (Singapore UEN No.: T03FC6366F) 4. AWH VENTURES SDN BHD (Company No.: 943400-X) ... INTERVENERS 1 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal JUDGMENT Introduction [1] This judgment concerns the application in encl. 180 by AWH Ventures Sdn Bhd, the 4th Intervener, for leave to rank lay-up fees of the ship ‘OCEAN WINNER’ (IMO No. 9242479) of the Port of Singapore (“the Ship”) as sheriff’s expenses. [2] In encl. 180, the 4th Intervener is claiming a monthly lay-up fees of RM36,200.00 for the period commencing from December 2020 to 17.11.2021, the date of this application, totalling a sum RM455,285.40. The 4th Intervener also claims interest at the rate of 1.5% per month on the claimed amounts as late payment charges amounting to RM35,838.00. [3] After hearing this application, I dismissed the 4th Intervener’s application. This judgment contains the full grounds for my decision. Background facts [4] The 4th Intervener is a company in the forwarding, transportation and logistics business and incorporated in Malaysia. In the 4th Intervener’s affidavit in support of this application, it avers that it had obtained an approval from the Malaysian Marine Department to operate lay-up 2 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal services within a designated area in North Tompok Waters (“the Designated Area”) for the period of 28.10.2017 until 27.10.2024 and exhibited a letter dated 19.2.2018 from the Malaysian Marine Department to AWH International Logistics Sdn. Bhd. to support this averment. [5] A Lay-up Application Form was signed by the 4th Intervener and Dafa Shipping Pte Ltd (Singapore UEN No. 1 98400892E) (“Dafa”), the owner of the Ship. The application was approved by the 4th Intervener on 29.9.2020 for the period of 30.9.2020 until 31.3.2021. This constituted the lay- up agreement between the 4th Intervener and Dafa (“the Lay-up Agreement”). [6] Before the Lay-up Agreement expired by effluxion of time on 31.3.2021, the Ship was arrested by the Sheriff of the Court pursuant to a Warrant of Arrest issued under the In Rem Action herein on 14.12.2020 at the request of the Plaintiff. [7] The Plaintiff, a foreign bank registered in Singapore, is the lawful holder of Bill of Lading No. PP1 57/20 dated 13.3.2020 (“the Bill of Lading”) in respect of petroleum products (“the Cargo”) shipped on board the Ship. Hin Leong Trading Pte Ltd (Singapore UEN No. 197301412M), a foreign company registered in Singapore, the Defendant in this In Rem Action, is the bailee, and/or persons in possession of the Cargo. Dafa, the Defendant and Ocean Tankers Pte Ltd (Singapore UEN No. 197800020G), a 3 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal foreign company registered in Singapore and part of the shipping arm of the Hin Leong Group, shared common directors and shareholders. This In Rem Action against the Ship was commenced on 16.6.2020 following a breach of obligations by the Defendant under the Bill of Lading as bailees, and/or persons in possession of the Cargo. The Warrant of Arrest was served on the Ship to obtain security for the Plaintiff’s claim against the Defendant. [8] On 18.1.2021, a Judgment in Default of Appearance was entered against the Defendant as the Defendant had failed to enter its appearance 14 days after service of the Writ in Action in Rem on 14.12.2020 and the Ship was ordered to be appraised and sold. [9] On 15.7.2021, the 4th Intervener filed an Ex-parte Notice of Application to intervene in this action and on 3.8.2021, the Court allowed the 4th Intervener’s application to intervene in this action. [10] On 17.11.2021, the 4th Intervener filed the present application in encl. 180 for leave to rank lay-up fees of the Ship as sheriff’s expenses. Until this application was filed, the Ship was located in the Designated Area. The 4th Intervener issued invoices to the Sheriff’s Agent for the sum to RM455,285.40 as of 9.11.2021 stated to be the charges for anchorage fees and administration together interest charges of RM35,838.00 for overdue payment at the rate of 4 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal 1.5% per month and continuing as long as the Ship remains in the Designated Area. [11] The Ship was subsequently sold to Offshore Recycling Fund Ltd (Company Registration No: C-118078) (“Offshore Recycling Fund”) by Judicial Sale on 23.11.2021. The sales proceeds totalling RM18,937,838.70 was paid into Court on 23.11.2021. The 4th Intervener’s submissions [12] The 4th Intervener submitted that the lay-up fees is part of the sheriff's expenses considering that there is an existing contract with the owner of the Ship before she was arrested by the Plaintiff. In this regard, the 4th Intervener contended and submitted as follows: a) The Ship continued to be in the Designated Area after her arrest; b) The Sheriff and the Sheriff’s Agent had knowledge of the existence of the Lay-Up Agreement even after the arrest was made; c) It is sufficient for the 4th Intervener to inform the Court of its claim as there is no specific provision that requires the 4th Intervener to enter into a contract with the Sheriff to make the lay-up fee part of the sheriff's expenses; 5 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal d) The 4th Intervener wrote to the Court and the Plaintiff before the filing of the intervener application to state that the arrears in lay-up fees were still ongoing due to the failure of the Sheriff’s Agent to explain the invoices that have been submitted; e) The 4th Intervener’s intervener application was allowed by the Court and the Court instructed the 4th Intervener to make an application to treat the lay-up fee expenses for the care and preservation of the Ship as sheriff’s expenses; f) While the Ship was anchored in the Designated Area, the 4th Intervener had taken care of the welfare and safety of the Ship to preserve her good condition; g) The 4th Intervener was never informed by the Sheriff’s Agent or the Plaintiff to apply for the relocation of the Ship to another area, indicating that the 4th Intervener’s lay-up services for the Ship is a requirement from the Sheriff’s Agent; h) The 4th Intervener’s lay-up services for the Ship has been acknowledged by the Sheriff’s Agent or the Plaintiff in this action since there is no effort to relocate the Ship to other waters; 6 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal i) The Sheriff’s Agent has knowledge of the existence of this claim through the receipt of invoices sent by the 4th Intervener; j) There is injustice and prejudice to the 4th Intervener as the Ship continued to be laid up in the Designated Area but no payment was made to the 4th Intervener as the licensed owner; k) The Sheriff’s Agent or the Plaintiff could have applied to relocate the Ship if the Sheriff’s Agent did not require the 4th Intervener’s lay-up services but this has never been done; and l) The relocation of the Ship would have protected the interests of the Plaintiff and the Sheriff’s Agent and the failure to do so has prejudiced the 4th Intervener who had to bear the losses of the lay-up fees. The Plaintiff’s submissions [13] The Plaintiff’s submissions are summarised as follows: a) The 4th Intervener is not the licensed operator of the Designated Area and has no locus standi to file this application as the “licence” was given by the Malaysian Marine Department to AWH International Logistics, not to the 4th Intervener; 7 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal b) This application cannot be allowed as there was no prior consent, approval or agreement from the Sheriff for the 4th Intervener to incur lay-up fees and for the same to be treated as sheriff’s expenses before the fees were incurred; c) No fresh agreement had been concluded between the Sheriff and the 4th Intervener concerning the lay- up fees for the Ship after the arrest of the Ship on 14.12.2020; d) The 4th Intervener’s claim of lay-up fees amounting to RM36,200.00 per month together (for 10.5 months) totalling RM455,285.40 and the claim for 1.5% late payment charges is unreasonable, exorbitant and without any legal basis; and e) There is an inordinate delay by the 4th Intervener in making this application as the Ship was arrested on 14.12.2020 and the 4th Intervener did not apply to intervene in this In Rem proceedings until 15.7.2021 which was allowed by the Court on 3.8.2021, 8 months after the Ship was arrested; [14] Additonally, the Plaintiff submitted that the 4th Intervener’s Application is tainted with lack of bona fides as this was filed in the circumstances that there was an inadvertent overpayment of RM50,841.20 by the Sheriff’s Agent to the 4th Intervener for various services rendered by the 4th 8 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal Intervener to enable the Sheriff’s Agent in carrying out its duties under the Omnibus Order. [15] The Plaintiff further submitted that the 4th Intervener is holding the Sheriff’s Agent to ransom by unlawfully withholding the overpayment sum of RM50,841.20 and has not come with clean hands in approaching the Court for assistance in respect of this application. In this regard the Plaintiff contended and submitted as follows: a) The Sheriff’s Agent had made full payments to the 4th Intervener for its services amounting to RM217,503.54 but after the Ship was sold judicially on 23.11.2021, the Sheriff’s Agent discovered that there was an inadvertent overpayment of RM50,841.20 to the 4th Intervener; b) Between 14.12.2021 until 3.1.2022 there was an exchange of correspondence between the Sheriff’s Agent and the 4th Intervener relating to the Sheriff’s Agent’s efforts in obtaining the refund of the overpaid sum but no refund of the same was forthcoming from the 4th Intervener; c) Due to the failure of the 4th Intervener to refund the overpaid sum, the Sheriff’s Agent wrote to the Sheriff on 5.1.2022 informing about the overpayment issue and that the 4th Intervener’s non-cooperation 9 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal affected the closing of the accounts of sheriff’s expenses; d) On 7.1.2022, the Sheriff issued an email requesting the 4th Intervener to expedite the refund of the amount owing from the 4th Intervener to the Sheriff’s Agent in the sum of RM50,841.20 to avoid unnecessary delay in the preparation of the sheriff’s expenses to be submitted to this Court but there was no response by the 4th Intervener; e) On 21.1.2022, the Sheriff’s Agent issued an invoice to the 4th Intervener for late payment charges and the Sheriff’s Agency Fees that was charged due to the non-refund of RM50,841.20; f) On 21.1.2022 after receiving the invoices of the Sheriff’s Agent, the 4th Intervener emailed the Sheriff’s Agent requesting for a list of documents from the Sheriff’s Agent, alleging for the very first time that the Sheriff’s Agent claim for late payment was not valid and was not acceptable to the 4th Intervener; g) The 4th Intervener’s reason for not refunding the overpaid amount that there was a lack of supporting documents from the Sheriff’s Agent was an afterthought as prior to 21.1.2022, the 4th Intervener had not asked for documents from the Sheriff’s 10 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal Agent as a pre-requisite for the refund of the overpayment of RM50,841.20 to the Sheriff’s Agent; h) The belated “need” for documents was only raised as a “reason” for the 4th Intervener’s failure / refusal to refund the amount of RM50,841.20 after the Sheriff’s Agent had complained to the Sheriff on 5.1.2021 and after the Plaintiff had raised the same in the Plaintiff’s affidavit in reply filed on 23.12.2021; and i) There is no lawful reason for the 4th Intervener to withhold the overpayment of RM50,841.20 and the irresistable inference is that the 4th Intervener is withholding the overpayment of RM50,841.20 to ensure that the 4th Intervener at least has the amount of RM50,841.20 in its hand in the event this application is dismissed. [16] Also premised on the above, the Plaintiff prays that the Court directs the 4th Intervener to return / refund the overpayment amount of RM50,841.20 owing to the Sheriff’s Agent within 7 days from the date of the Order. Findings and analysis of the Court Locus standi [17] In respect of the 4th Intervener’s submissions that the 4th Intervener is not entitled to any lay-up fees because it is not 11 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal the licensed operator of the Designated Area and has no locus standi to file this application the Plaintiff further contended and submitted as follows: a) Contrary to the 4th Intervener’s claim that it is the licensed operator of the Designated Area, actually it is not; b) The letter dated 19.2.2018 from the Malaysian Marine Department expressly states that the company which had obtained the License of Lay-up Operator is AWH International Logistics and not the 4th Intervener; c) The alleged Letter of Authorisation dated 30.12.2018 issued by AWH International Logistics Sdn Bhd (“the Letter of Authorisation”) does not prove that the 4th Intervener holds a valid and lawful license from the Malaysian Marine Department to occupy, to enter into agreements and/or to make any claim for the usage of the Designated Area; d) The Court, the Sheriff, the Sheriff’s Agent and the Plaintiff did not have knowledge of the existence of that Letter of Authorisation until the 4th Intervener’s standing in this Court was challenged by the Plaintiff in these proceedings; 12 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal e) The Letter of Authorisation only “authorised” the 4th Intervener to represent AWH International in “any legal proceeding initiated by or against AWH International Logistics” but never authorised the 4th Intervener to file any legal proceeding on behalf of AWH International Logistics; and f) There is no claim for lay-up fees made by the Malaysian Marine Department or AWH International Logistics against the Ship. In the event the Ship is required to pay for any lay-up fees in the Designated Area to the Malaysian Marine Department, the proper person responsible for such fees of the Ship is the Licensed Operator, AWH International Logistics Sdn Bhd. [18] The 4th Intervener submitted that the Letter of Authorisation dated 30.12.2018 is sufficient to prove that AWH International Logistics has given the 4th Intervener the locus standi to act on behalf of AWH International Logistics. The 4th Intervener argued that the letter states that the 4th Intervener has been given full mandate to initiate any proceedings to claim payment involving the applicant as a licensed operator authorised by the Malaysian Marine Department. [19] Further, the 4th Intervener contended that the Plaintiff did not object to the 4th Intervener’s application to intervene in these proceedings. Therefore, the Plaintiff cannot now 13 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal dispute the 4th Intervener’s right to demand the payment of the lay-up fee in this application. [20] After considering the submissions and the affidavit evidence, I agree with the submission of the Plaintiff and hold that the 4th Intervener has no locus standi to file this application. [21] It is undisputed that the Licence of Lay-up Operator given by the Malaysian Marine Department by way of its letter dated 19.2.2018 was to AWH International Logistics and not the 4th Intervener. Therefore, whether the 4th Intervener has the locus standi to make this application depends critically on the effect of the Letter of Authorisation. The letter states: “I, MOHD AZIZUL BIN MOHD NASIR (NRIC NO: 831107-01-5171), the Managing Director of AWH International Logistics Sdn Bhd (“the Company”) [Company No: 201301012552 (1052381-A)], a company listed with the Companies Commission of Malaysia, on behalf of the Company, hereby authorise AWH Ventures Sdn Bhd (Company No: 201101015266 (943400-x)), to conduct all matters related to the approval License of Lay-up Operator authorized by Marine Department Malaysia (“the License Operator”) for and on behalf of the Company and to sign, initial, accept, payment or execute all documents in connection with the License Operator inclusive to represent the company for any legal proceeding initiated by us or against us. This authorization is effective from 28.10.2017 to 27.10.2024. Any and all acts carried out by AWH Ventures Sdn Bhd (Company No: 201101015266 (943400-x)) on our behalf shall have the same effect as acts of our own.” 14 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal [22] I observe at the outset that while the authorisation given by AWH International Logistics to the 4th Intervener allows the 4th Intervener to do a number of things on behalf of AWH International Logistics, it has not transferred the rights or benefits belonging to AWH International Logistics in respect of the Designated Area license to the 4th Intervener. Being the licensed operator of the Designated Area, it is AWH International Logistics that ultimately has the rights to any payments due for services that the 4th Intervener provides as the 4th Intervener is only allowed to act on behalf of AWH International Logistics. At best, the 4th Intervener may collect the lay-up fees due to AWH International Logistics on behalf of AWH International Logistics but this does not mean that the payments belong to the 4th Intervener. [23] In this sense, it is AWH International Logistics that will be the entitled party to claim for the lay-up fees and the proper party to make this application is AWH International Logistics and not the 4th Intervener. The words “to represent the company for any legal proceeding initiated by us or against us” necessarily mean that any legal proceedings contemplated here is by AWH International Logistics or against AWH International Logistics and the right to “represent the company for any legal proceeding” given to the 4th Intervener may include instructing solicitors or even attending court on behalf of AWH International Logistics but does not extend to filing an action, including this application, in the 4th Intervener’s own name as a party to the action. 15 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal [24] As for the argument by the 4th Intervener that it is entitled to make this application as it was allowed to intervene by the Court, I observe that the 4th Intervener’s application to intervene in encl. 117 was an ex-parte application. At the hearing on 3.8.2021, it was only attended by the solicitor for the 4th Intervener. The full extent of the 4th Intervener’s locus standi or lack thereof was not revealed at this ex-parte hearing and the Plaintiff is entitled to further argue the issue of the 4th Intervener’s locus standi in this application. [25] Notwithstanding my finding that the 4th intervener has no locus standi to file this application, I shall consider the other grounds of objection raised by the Plaintiff, if I am wrong on this point. No prior consent [26] The Plaintiff submitted that this application cannot be allowed as there was no prior consent, approval or agreement from the Sheriff for 4th Intervener to incur lay-up fees and for the same to be treated as sheriff’s expenses. In this regard the Plaintiff contended and submitted as follows: a) It is a rule of practice that before an item of expenditure may be cast as sheriff’s expenses, and so rank as first charge on the proceeds in the hands of the Court, it must not only arise from the preservation and good management of the Ship but also receive the sanction of the Court or the Sheriff; 16 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal b) There was ample time after the Ship was arrested on 14.12.2020 for the 4th Intervener to take the necessary measures to intervene, to obtain sanction from this Court for any lay-up fees and also to have the Ship relocated outside the Designated Area which was not done by the 4th Intervener but instead, the 4th Intervener filed this application as late as 17.11.2021; c) The claimed lay-up fees and the continued accrual of the same are due to the 4th Intervener’s refusal to relocate the Ship in the first place; and d) Although the 4th Intervener had sent letters to the Court, the Plaintiff and the Sheriff’s Agent on 2.2.2021, 10.3.2021 and 11.3.2021 to inform them about the outstanding lay-up fees incurred since October 2020, the Sheriff cannot be seen to react to any letter issued by a non-party in this proceeding as if it was a proper application before the Court since the 4th Intervener only obtained an order to intervene in this action on 3.8.2021, 8 months after the Ship was arrested on 14.12.2020. [27] In response to the Plaintiff’s submission, the 4th Intervener submitted as follows: a) There was an existing contract with the owner of the Ship before she was arrested which allowed the Ship 17 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal to be in the Designated Area after she was arrested by the Plaintiff on 14.12.2020 and after she was sold to the successful bidder on 23.11.2021; b) It is the Plaintiff who should have applied to relocate the Ship through the Sheriff’s Agent as the responsibility to relocate the Ship is not on the 4th Intervener given that the Plaintiff through the Omnibus Order has custody of the Ship and could claim any costs arising in the issue of custody of the Ship during her detention; c) The Sheriff's Agent never requested the consent from the Sheriff to relocate the Ship although the Sheriff's Agent could have done so; d) As the 4th Intervener’s intervener application was allowed on 3.8.2021, there is no issue in the 4th Intervener making this application in encl. 180 on 17.11.2011; e) The Sheriff’s Agent failed to include the 4th Intervener’s lay-up fee as sheriff’s expenses while other claims of the 4th Intervener for other services were included; and 18 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal f) The 4th Intervener is entitled to a lay-up fee payment claim as the 4th Intervener’s contract with the Ship continued to exist and has never been cancelled or disputed by the Plaintiff or the Sheriff's Agent. [28] In support of the 4th Intervener’s submissions, the Court was referred to the case of ‘Nagasaki Spirit’ [1994] 2 SLR 621 which held that it is only rule of practice and not a rule of law that the approval of the Sheriff or the Court be obtained before incurring an item of expenditure which may be cast as Sheriff's expenses. It was stated by Karthigesu JA as follows: “It is clear to me that the Court of Appeal in The Euroexpress regarded the necessity of obtaining the Sheriff’s approval or the court’s approval before incurring an item of expenditure which may be cast as Sheriff's expenses as a rule of practice only and did not regard the necessity of approval be that of the Sheriff or the court as a rule of law. Indeed, as a rule of practice it is a good one because it appraises the Sheriff before the expenditure is incurred and if he is in any doubt as to whether he should allow the expenditure to be incurred as his expenses to seek the court's direction thereon...” (Emphasis added) [29] The 4th Intervener also submitted that that the lay-up fees should be ranked as sheriff’s expenses as the lay-up expenses were incurred for the benefit of all those interested in the Ship. The 4th Intervener referred the Court 19 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal to the case of Corps v. Paddle Steamer Queen of the South (Owners), the Queen of the South [1968] 1 All ER 1163 where Brandon J stated: “Recent decisions of this court show that, where it is for the benefit of all those interested in a ship that the marshal should incur expenditure on her in order to enable him to sell her to advantage, the court may authorise him to incur such expenditure (see The Parita; The Westport (No 2 British Mexican Petroleum Co Ltd v M/S or Vessel Westport).” (Emphasis added) [30] Further, the 4th Intervener referred the Court to the case of Kleinwort, Benson Ltd v. Sherkate Sahami Sakht (The ‘Myrto’ - No. 1) [1984] Lexis Citation 1462 for the proposition that lay-up fees, being wharfage charges or berthing should form part of the sheriff’s expenses. Sheen J stated: “lt is to be noted that the claim in that case related to wharfage charges. A ship under arrest must frequently have to lie at a wharf. In such circumstances no wharf-owner would permit a ship to lie at its wharf unless it was quite satisfied that it was going to be paid. In England the Admiralty Marshal would have assumed responsibility for the payment of wharfage from the moment when the ship was arrested and was, therefore, in his custody. Wharfage charges or berthing charges always form part of the Marshal's expenses. New York Dock Company v SS Poznan (1927) AMC 723 arose only because the New York Dock Company looked to the ship-owner for payment of dues accruing after POZNAN was in the custody of the Marshal. It went to the Supreme Court only because a totally unsound and unmeritorious point 20 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal had succeeded on appeal. I do not derive any assistance from that decision.” (Emphasis added) [31] The Plaintiff, in support of its submission that the consent of the Sheriff or the Court must be obtained before any expense is incurred, referred the Court to the case of The ‘Eastern Lotus’ Ex ‘Spring Flower’; Urzad Morski W Szczecinie v. Moscow Narodny Bank Ltd [1980] 1 MLJ 137 where the Singapore the Court of Appeal, speaking through Wee Chong Jin CJ, opined as follows: “There was only one thing for the applicants to do. That was to apply to the court for sanction. This they did. They served the papers on the Sheriff. His primary duty is to protect and preserve the res under arrest, for he had a valuable object within the jurisdiction. He did not attend the hearing. He did not because he had no objection to the application. He must have concluded that it was a reasonable and proper application. Nay, he must also have concluded that it was a necessary application. The applicants had come forward, as principal creditors, for leave to pay off the master and crew and have them repatriated. For the Sheriff, if the order was granted, for the reasons I have given, it will facilitate him in carrying out his duties. He would be able to execute the commission for the appraisement and sale. And so, the application had his blessings. Besides the cases of The General Serret where repatriation expenses were made, Admiralty Marshal's charges and The Fairport where classification society's fees were held recoverable as first priority, there is the case of The Olga (1921) 7 Ll LR 130. In this case the Admiralty Marshal sold the vessel and the proceeds of sale were in court. The court ordered the wages of the crew, their repatriation expenses and their board and lodging to be paid out of the fund in court. In another case 21 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal The Rene (1922) 12 FILR 202 the claimants had supplied ballast to the vessel after arrest to enable her cargo to be discharged and priority was sought for the expenses. The claim was rejected, but Hill J. said, ‘if it had been shown that the ballasting was done at the instance of the Marshall he would have been entitled to include the cost of ballasting in his expenses. But it was not done in that way.’ The effect of the decision is, as I see it, that if an application had been made to court, and the court was satisfied that the ballasting was a necessary operation in the preservation of the ship under arrest, the ballast claim which ranks very low in the order of priorities would have moved right to the top to rank as the Marshal's expenses.” (Emphasis added) [32] The Plaintiff also referred to The ‘Euroexpress’ [1988] 3 MLJ 367 where Wee Chong Jin CJ stated: “Costs of retrieval and reinstallation of the port anchor as sheriff's expenses In seeking to claim this item of expenditure as sheriff's expenses, counsel for the appellants very properly conceded that in the present case, neither the sheriff nor the court has at any stage authorized the recovery of the lost anchor and anchor chain. Counsel, however, sought to justify his application essentially on the ground that the recovery, which was done 'in consultation with' or 'with the knowledge' of the sheriff, was for the benefit of all because it increased the security of the vessel. It was contended that for this reason, the appellants were entitled to include the cost of recovery as part of sheriff's expenses. We cannot accept that submission. In the first place, it is an incontrovertible rule of practice that before an item of expenditure may be cast as sheriff's expenses, and so rank as first charge on the proceeds in the hands of the court, it must not only arise from the preservation and good management of the vessel but must also receive the sanction of the 22 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal court or the sheriff: see The Rene [1955] 1 Lloyd's Rep 101 and The Eastern Lotus [1980] 1 MLJ 137. In the present case, there can be no doubt that the recovery of the anchor - even assuming that it was done to enhance the value of the vessel - was clearly not carried out at the instance of the sheriff. In the second place, the loss of the anchor occurred while the appellants were operating or managing the vessel in the discharge of their cargo. Its recovery must be the obligation of the appellants who must bear the costs of recovery.” (Emphasis added) [33] I hold that under the circumstances, it was necessary for the 4th Intervener to have obtained the consent of the Sheriff or the Court to have the lay-up fees rank as sheriff’s expenses before this was incurred. [34] I accept the Plaintiff’s submission that the 4th Intervener could have quickly intervened and then sought for the consent from the Sheriff as soon as the Ship was arrested on 14.12.2020. The 4th Intervener could also have applied to have the Ship relocated outside the Designated Area which it failed to do. Even if it is not a rule of law, as stated by Karthigesu JA in the ‘Nagasaki Spirit’ that the approval of the Sheriff must be obtained before incurring an item of expenditure which may be cast as sheriff's expenses, it is still a rule of admiralty practice to obtain the prior sanction of the Court or the Sheriff before an expenditure can be cast as sheriff’s expenses, as decided in The ‘Euroexpress’. If no such sanction is given and an application to rank the expenditure as Sheriff's expenses is made then the Court 23 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal will examine the conduct of the 4th Intervener during the period from the moment the Ship was arrested until the time this application is made. It is not sufficient for the Court to only consider that the expenses arise from the preservation and good management of the Ship to determine whether such an application should be allowed. [35] I consider that the 4th Intervener’s conduct in waiting almost 8 months to apply to intervene to be lackadaisical. In this regard I accept the Plaintiff’s submission that there was an inordinate delay by the 4th Intervener to make this application. The Plaintiff contended and submitted as follows: a) Between 3.8.2021, when leave to intervene was granted, until 17.11.2021, when this application was filed, during which the 4th Intervener participated in 4 case managements in Court, the 4th Intervener did not see it fit to apply to this Court for leave to rank the claimed lay-up fees as sheriff’s expenses; b) Had the 4th Intervener moved the Court earlier, the Court could have directed the Sheriff to determine a reasonable amount for lay-up fees, and if necessary, by appointing an expert to arrive at that determination; and 24 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal c) As the Ship had been sold on 23.11.2021 to Offshore Recycling Fund, the Sheriff cannot enter into any retrospective agreement with the 4th Intervener for lay-up fees as the Court is now functus officio to enter into any agreement with any licensed operator for lay-up fees since the Ship is no longer under the control, care and custody of this Court. [36] I do not accept the submission put forward by the 4th Intervener that there is no delay in making this application as the Ship was only sold to Offshore Recycling Fund on 23.11.2021, which is after this application was filed on 17.11.2021. The 4th Intervener argued that the Court is not functus officio in this respect and due to this, the Court still has the jurisdiction to hear this application. [37] The fact of the matter is, the 4th Intervener, by not intervening as soon as possible after the Ship was arrested and failing to take steps to relocate the Ship or obtain the Sheriff’s consent for the lay-up fees to be ranked as sheriff’s expenses, had caused the lay-up expenses to balloon up unnecessarily. It does not assist the 4th Intervener’s case that the 4th Intervener’s claim of lay-up fees amounting to RM36,200.00 per month together (for 10.5 months) totalling RM455,285.40 and the claim for 1.5% late payment charges is also not supported by any documents to show that this is based on comparable market rates for lay-up fees in that region of waters. The increased expenses were occasioned by the 4th Intervener’s delay. It matters not that this 25 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal application was filed before the Judicial Sale was completed as the Court cannot ignore this delay. If the 4th Intervener’s conduct is to be condoned, this would mean that providers of lay-up services could unilaterally charge for their services in the absence of a fresh agreement with the Sheriff for these to be included as sheriff’s expenses for a prolonged period. This would be to the detriment of other parties interested in the proceeds of sale of an arrested ship. [38] I agree with the Plaintiff that no fresh agreement had been concluded between the Sheriff and the 4th Intervener concerning the lay-up fees for the Ship after the arrest of the Ship on 14.12.2020. The correspondence between the 4th Intervener and the Sheriff’s Agent on 23.12.2020, 24.12.2020 and 25.12.2020 were only in respect of the provision and obtaining of a quote for a proposal of charges for various services including the monthly anchorage fees. The monthly invoices from the 4th Intervener to the Sheriff’s Agent for the lay-up fees were issued despite there being no agreement entered between the Sheriff and any quotations from the 4th Intervener yet to be submitted for the Sheriff’s approval. [39] I cannot agree with the 4th Intervener’s submission that because there was an existing contract in respect of the Ship before the arrest and the Sheriff's Agent failed to provide a reply and explanation to the 4th Intervener regarding the lay-up fee payment issue, this has indirectly 26 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal caused the 4th Intervener to continue waiting for the reply and issue the invoices. [40] The Lay-Up Agreement entered into between the 4th Intervener and the owner of the Ship before the arrest of the Ship does not entitle the 4th Intervener’s claim to be ranked as sheriff’s expenses as such an agreement does not bind the Court, the Sheriff and the Sheriff’s Agent. As held above, the prior sanction of the Court or the Sheriff must be obtained before an expenditure can be cast as sheriff’s expenses due to the rule of admiralty practice. Expenses incurred “in consultation with” or “with the knowledge” of the Sheriff are not expenses approved by the Sheriff. The 4th Intervener’s informing the Court by way of letters about the 4th Intervener’s claim also does not automatically bind the Court and the Sheriff. Bona fides of this application [41] Finally, I address the contention by the Plaintiff that the 4th Intervener’s Application is tainted with lack of bona fides as this was filed in the circumstances that there was an inadvertent overpayment of RM50,841.20 by the Sheriff’s Agent to the 4th Intervener for various services rendered by the 4th Intervener to enable the Sheriff’s Agent in carrying out its duties under the Omnibus Order. The Plaintiff contended there is an irresistable inference that the 4th Intervener is withholding the overpayment of RM50,841.20 to ensure that the 4th Intervener at least has the amount of 27 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal RM50,841.20 in its hand in the event this application is dismissed. Consequential to this, the Plaintiff prays that the Court directs the 4th Intervener to return / refund the overpayment amount of RM50,841.20 owing to the Sheriff’s Agent within 7 days from the date of the Order. [42] I will firstly state that it is not necessary for the Court to make a finding on this issue for the purpose of determining whether the 4th Intervener’s application herein should be allowed as the grounds that have been stated earlier are more than sufficient for the Court to be moved to dismiss this application. [43] As for the Plaintiff’s prayer that the Court directs the 4th Intervener to return / refund the overpayment amount of RM50,841.20 owing to the Sheriff’s Agent within 7 days from the date of the Order, I am of the view that I am not empowered to make such an order as this goes beyond the scope of an application for the lay-up fees to rank as sheriff’s expenses. This application is made under O. 70 r. 11(3) Rules of Court 2012 by the 4th Intervener specifically for directions with respect to property under arrest. It cannot extend to such orders as prayed for by the Plaintiff which is a claim for refund for monies owed by the 4th Intervener to the Sheriff’s Agent in respect of payments for other services provided by the 4th Intervener which are not part of the lay- up services. Only the issue of whether for the lay-up fees could rank as sheriff’s expenses is the subject matter of this application 28 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal Conclusion [44] Premised on Plaintiff and 4th Intervener’s affidavits and submissions, I conclude that the 4th Intervener does not have a right to have the claimed lay-up fees ranked as sheriff’s expenses. [45] Accordingly, I dismissed encl. 180 with costs of RM10,000.00 subject to the allocator. 9 August 2022 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: G Rajasingam, Tan Hui Ling, Tong Wei Hang and Ong Tze Xian (PDK) (Messrs Shearn Delamore & Co.) For the 4th Lydiana Mansor and Farah Nuraliah Intervener: (Messrs. Lydiana Law Chambers) 29 S/N ZTRQmiabHEebxAu1hxhqIA **Note : Serial number will be used to verify the originality of this document via eFILING portal