1 The defendants in this case applied by Summons-in-Chambers entered No 1329 of 1991 on 4 March 1991 for the discharge of the ex parte interim injunction which the plaintiffs obtained on 19 February 1991 which, inter alia:

2 Attendant with Summons-in-Chambers entered No 1329 of 1991, the defendants had also separately applied (vide Summons-in-Chambers entered No 1372 of 1991) for an extension of time until the hearing of the former, to comply with the order for discovery.

3 The plaintiffs` statement of claim averred that the plaintiffs as the owners and/or consignees and/or indorsees of bill of lading no 90314 dated 7 January 1991 had shipped iron ore concentrate (`the goods`) on board the defendants` vessel Protektor (`the vessel`) from Port Cartier, Quebec, Canada to Oxelosund, Sweden. The goods never reached their destination as the vessel sank with the loss of all 33 lives on board on or about 12 January 1991 in the North Atlantic Ocean off the Grand Banks of Newfoundland due to severe weather conditions caused by hurricane force winds.

4 The plaintiffs contended that although the weather and sea conditions experienced by the vessel at the time when she first reported taking in water and when she ultimately sank may have been severe, they were not abnormal or unforeseeable for a winter voyage across the North Atlantic Ocean and therefore the loss of the vessel and the cargo on board her were due to unseaworthiness of the vessel in being unable to withstand the normal sea and weather conditions of a winter passage across the North Atlantic Ocean. The plaintiffs therefore claimed against the defendants the FOB price of the goods including freight and insurance premium paid thereon which sum of US$2,131,464.48 together with interest and costs added would approximate US$3,573,495.50

5 The plaintiffs` application for the ex parte injunction was supported by an affidavit of their counsel, Belinda Ang-Fong Saw Ean, filed on 18 February 1991 and the relevant paragraph thereof was para 23 which stated:

6 The defendants contended, inter alia, that such a worldwide Mareva injunction ought not to have been granted as the evidence did not disclose any risk of dissipation of assets.

7 After hearing lengthy arguments from both counsel, I discharged the injunction in terms of Summons-in-Chambers No 1329 of 1991, ordered early trial dates for the suit and I made no order on Summons-in-Chambers entered No 1372 of 1991. I now give my reasons.

8 It was not disputed by either counsel that the plaintiffs have a good arguable claim for purposes of obtaining a Mareva injunction although in his earlier affidavit filed on 18 March 1991 counsel for the defendants had contended that the plaintiffs had failed to make out such a case. The only dispute was whether the facts disclosed showed that there was a real risk that the defendants would dissipate their assets, in particular, the vessel`s hull insurance proceeds so as to deny the plaintiffs the fruits of their claim should they succeed.

9 Counsel for the defendants, in his affidavit filed on 2 May 1991 (`the affidavit`) in support of his application to discharge the plaintiffs` injunction, had contended (and exhibited documents in support thereof) that the defendants, a Singapore company, were not entitled to any of the vessel`s hull insurance proceeds for the following reasons:

10 There was no documentation exhibited to the affidavit to substantiate the figures in items d(i) to d(iii).

11 Counsel for the defendants argued:

12 Counsel for the plaintiffs argued, inter alia, that:

13 Counsel for the plaintiffs contended that the four-party agreement was a judgment-proof arrangement created by companies within the same group as an attempt to circumvent the claims of creditors including the plaintiffs`. Therefore the injunction should not even be varied let alone discharged since it cannot be said that any of the payments sought to be made under the four-party agreement were in the ordinary course of business (the Angel Bell [1981] QB 65 exception).

14 In reply to the submissions of counsel for the plaintiffs, counsel for the defendants produced, inter alia, the accounts of Trustees Savings Bank (TSB) Group plc which showed that Wallem is a wholly-owned subsidiary of TSB Group BV, a Dutch company which in turn is owned by Hill Samuel Insurance and Shipping Holdings Ltd, which in turn is a wholly-owned subsidiary of TSB plc. Prior to its sale to the private sector, the British government had a substantial interest in TSB plc. The defendants therefore made no attempt to hide the relationship between three of the four parties to the four-party agreement as alleged by the plaintiffs.

15 I was satisfied that the facts of this case and the conduct of the defendants were far removed from cases where the situation `cries out` as a matter of justice to the plaintiffs for the grant of a pre-judgment worldwide Mareva injunction (per Kerr LJ in Babanaft International v Bassatn e [1989] 2 WLR 232 ). I was also aware that the granting of a worldwide Mareva injunction is a draconion measure to be ordered in very exceptional circumstances - see Republic of Haiti v Duvalie r [1990] 1 QB 202 and Derby & Co Ltd v Weldon (No 1) [1989] 2 WLR 276

16 There was no evidence here that the defendants had in fact secreted or attempted to secrete assets outside the jurisdiction so as to render nugatory any judgment to which the plaintiffs might ultimately be entitled. I was not convinced by the arguments of counsel for the plaintiffs that evidence of the risk of dissipation of assets exists in the four-party agreement itself. Whilst I accept that the defendants, their mortgagees (Hill Samuel) and Wallem (the defendants` parent company) all belong to one group, viz the TSB group of companies, their inter-relationships do not give rise to any sinister connotations. I considered the various security documents which they had executed to be strictly commercial arrangements, notwithstanding their close ties. Further, the very fact that Cador had the option to purchase the vessel upon the expiry of the charterparty for a nominal sum of US$10,000 clearly showed that there was some element of a hire-purchase arrangement in the charterparty, and that Cador had more than a charterer`s usual interest in the vessel, hence its special rights under the four-party agreement. Even if the four-party agreement did not equitably assign the hull insurance surplus to Cador (on which I expressed no opinion), I was of the view that the defendants should not be prevented from discharging their contractual obligations to Cador as well as to the other parties to the same, made in the ordinary course of business. Counsel for the plaintiffs had neither disputed nor contradicted the statements in the affidavit of counsel for the defendants (filed on 18 March 1991) that the vessel`s managers, Wallem Shipmanagement, are one of the five foremost ship management companies in the world, managing a fleet of over 100 vessels. As for the plaintiffs` argument that the defendants are a one-ship company, I would say that it is the norm rather than the exception in the shipowning industry.

17 I was also mindful of the fact that although they have a good arguable case, the plaintiffs have not yet proceeded to judgment but are merely claimants for unliquidated damages against a company. They do not, contrary to the assertions of their counsel, come within the definition of a `creditor` under s 254(2)(a) of the Companies Act (Cap 50, 1990 Ed) for purposes of presenting a winding-up petition. It may well be that ultimately the plaintiffs may not succeed in their contention that the vessel was unseaworthy at the commencement of her last fateful voyage in which event her sinking being fortuitous (which was not disputed), the defendants would not be liable for damages and or the sum claimed.

18 I agreed with the arguments of counsel for the defendants based on the Privy Counsel decision in Pao On v Lau Yiu Long [1980] AC 614 that performance of an existing duty by Cador to a third party can be good consideration. Cador`s obligation under the four-party agreement was not only to the defendants to continue to perform the charterparty but also to Hill Samuel and Wallem, both of whom depended upon Cador`s payments to discharge the mortgage and loan amounts due and owing to Hill Samuel. Cador`s obligation to pay hire under the charterparty was separately secured by a guarantee furnished by another Swedish company to the defendants, under the terms of the facility letter dated 9 February 1991.

19 There was no evidence, let alone cogent evidence, that the defendants had foreign assets nor that there was a real risk of the defendants disposing of the same to defeat the plaintiffs` claim.

20 It appeared that the plaintiffs had invoked the machinery of a Mareva injunction to obtain security for their claim which is an abuse of the process. (See `The Niedersachsen` [1983] 2 Lloyd`s Rep 660 )

21 Finally, there was no reason to believe and certainly there was no evidence produced by the plaintiffs to that effect, that the vessel`s P & I Club would not honour its obligations to the defendants (subject to the rules of the Club), in the event that the plaintiffs succeed in their claim, albeit on the `pay and be paid` principle which require the defendants to meet the plaintiffs` claim first and then look to the Club for reimbursement.

22 For the above reasons therefore I granted the defendants` application, discharged the plaintiffs` injunction and awarded the defendants (taxed) costs thereof. I further certified that I required no further arguments.

23 Outcome:

24 Application allowed.