| The "Kiku Pacific" [1999] 2 SLR 595; [1999] SGCA 96 |
| CA 305/1998 | |
| 27 Apr 1999 | |
| Court of Appeal | |
| Karthigesu JA, L P Thean JA, Yong Pung How CJ | |
| Steven Chong SC and Chua Choon King (Rajah & Tann) for the appellants, Haridass Ajaib and R Srivathsan (Haridass Ho & Partners) for the respondents |
Judgment
[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.] Karthigesu JA (delivering the grounds of judgment of the court): 1 This was an appeal from the decision of Choo Han Teck JC in the matter of Adm in Rem 389/96, where the learned judge dismissed the appellants’ counterclaim for damages for wrongful arrest. We heard the appeal on 5 April 1999 and dismissed it. We now give our reasons. The facts 2 The appellants are the owners of the vessel Kiku Pacific (“the owners”). The respondents are Fal Energy Co Ltd (“Fal”), a company incorporated in Sharjah, United Arab Emirates (“UAE”), carrying on the business of fuel and oil supplies. 3 On 28 December 1995 at 1.41pm, the agents of Fal in the United Kingdom received a telex from Martin Millard of Marine Supplies Services Ltd (“MSSL”). MSSL were the brokers for Forsythe International UK Ltd (“Forsythe”). In the telex, MSSL made an offer on behalf of Forsythe to purchase 100 metric tons of diesel oil at USD193 per ton and 500–600 metric tons of intermediate fuel oil at USD118 per metric ton (“the marine oil”). This offer was accepted by the agents of Fal through a telex on the same day at 2.10pm. 4 At 1.50pm of that same day, MSSL sent a telex to Albany Bunkers Ltd (“Albany”), who were the brokers for the owners. The telex contained an offer from Maritime Brokers Ltd (“Maritime”) to sell the same quantity of diesel oil at USD190 and the same quantity of intermediate fuel oil at USD116.50 to Tankers Pacific Management, who were the managing agents of the Kiku Pacific. Albany replied on the same day by telex to accept the offer. 5 From the owners’ investigations subsequent to the dispute between the parties, it was revealed that there was a series of back-to-back contracts for the marine oil. Fal sold the marine oil to Forsythe, who in turn sold it to Wm Scollay & Co Ltd (“Wm Scollay”), who in turn sold it to South Pacific Energy Trading (“SPET”), who in turn sold it to Maritime, who in turn sold it to the owners. Neither Fal nor the owners were aware that there were intermediary parties between Forsythe and Maritime. 6 The marine oil was delivered by Fal to the Kiku Pacific on 1 and 6 January 1996. Maritime received payment in full from the owners. Fal however failed to receive payment from Forsythe. Fal wrote to Albany on 16 and 19 February 1996 to seek payment from the owners. In late February 1996, representatives of Fal and the owners met in London. There the owners offered security to Fal pending resolution of the dispute but the offer was rejected. Another offer of security was made in March 1996 in the form of a letter of undertaking from the London Steamship P&I Club, with provision for the claim to be subject to English jurisdiction. The security was rejected by Fal, who wanted a first class bank guarantee, and wanted the claim to be subject to UAE jurisdiction instead of England. 7 On 8 July 1996, FAL arrested the Kiku Pacific in Singapore. The vessel was released on 10 July 1996 after the owners provided security in the form of a letter of undertaking from the London Steamship P&I Club. The letter of undertaking was identical to that offered in March 1996, except that jurisdiction was to be in Singapore. 8 In the court below, Fal brought a claim for the price of the marine oil of USD143,548.60. The owners in turn brought a counterclaim for damages for wrongful arrest. Decision of the trial judge 9 The trial judge dismissed Fal’s claim for the price of the marine oil. 10 In respect of the counterclaim for damages for wrongful arrest, the trial judge took the view that the cornerstone of an action for damages for wrongful arrest was malice, or gross negligence implying malice. He rejected the use of the term “reasonable and probable cause” saying: 13 … In my view, ‘reasonable and probable’ cause is the language of an action founded on malicious prosecution. It is a term that envisages a slightly higher burden of proof for a person to launch a criminal prosecution against another (presumably because of the greater stigma and consequences) than that required in civil actions. The arrest of a vessel under the admiralty jurisdiction is essentially a civil action and the requirements are understandably lower. The test for wrongful arrest in such cases is based only on whether the arresting party was actuated by malice. 14 A reliance on ‘reasonable and probable cause’ may lead to confusion and semantic arguments. A plaintiff who fails in his action fails because he has not proved his case on a balance of probabilities. That does not mean that he had no reasonable or probable cause to arrest the vessel in the first place, otherwise, every time a plaintiff fails he becomes obliged to pay damages for wrongful arrest. That is not the law. Mitchell v Jenkins (1833) 5 B & Ad 588 and Hicks v Faulkner (1878) 8 QB 167 cited by counsel were both cases concerning malicious prosecution and not the wrongful arrest of a vessel. 11 The owners referred to The Evmar 12 In his concluding assessment of the owners’ case for wrongful arrest, the trial judge said: 16 … the plaintiffs had sailed very close to the wind in bringing this action against the defendants, and refusing their offer of security. They were, in my view, just a whisker away from having an inference of malice drawn against them. Their cause of action was palpably weak and could not have taken root … So, although I also find that the reason for rejecting the defendants’ initial offer of security was a feeble one I think that this was a borderline case. However close the plaintiffs may be to that thin line between bona fide and mala fide, that line must still be crossed before liability is found. On the facts, I will not go so far as to say that the plaintiffs had crossed the line. The trial judge accordingly dismissed the counterclaim but made no order as to costs for the counterclaim. The appeal 13 Fal brought an appeal under CA 298/98 against the trial judge’s dismissal of their claim against the owners for the price of the marine oil. We heard the appeal on 5 April 1999 and dismissed it. This cross appeal, CA 305/98, was brought by the owners against the trial judge’s dismissal of their counterclaim for damages for wrongful arrest. The test for wrongful arrest 14 The test for wrongful arrest of a vessel dates back some 150 years to the well known Privy Council decision of The Evangelismos (1858) 12 Moo PC 352 where the Rt Hon T Pemberton Leigh said in that famous passage at p 359: Their Lordships think there is no reason for distinguishing this case, or giving damages. Undoubtedly there may be cases in which there is either mala fides, or that crassa negligentia, which implies malice, which would justify a Court of Admiralty giving damages, as in an action brought at common law damages may be obtained. In the Court of Admiralty the proceedings are, however, more convenient, because in the action in which the main question is disposed of, damages may be awarded. The real question, in this case, following the principles laid down with regard to actions of this description comes to this: is there or is there not, reason to say, that the action was so unwarrantably brought, or brought with so little colour, or so little foundation, that it rather implies malice on the part of the plaintiff, or that gross negligence which is equivalent to it? 15 This eminent passage was adopted in 1869 by Sir Robert Phillimore in his decision in The Margaret Jane (1869) LR 2 A&E 345, and in 1875 by the Privy Council in their decision in The Strathnaver (1875) 1 App Cas 58. The judgment of their Lordships was delivered by Sir Robert Phillimore, who after quoting from the above passage of the Rt Hon T Pemberton Leigh, said at p 67: Their Lordships came to the conclusion, though the case was certainly a very strong one, inasmuch as the wrong vessel had been seized, that in the absence of proof of mala fides or malicious negligence, they ought not to give damages against the parties arresting the ship. It appears to their Lordships that the general principles of law are correctly laid down in that judgment, and it is their intention to adhere to them. 16 In the years that have intervened since the time of The Evangelismos, courts have oft cited and followed that hallowed statement of the Rt Hon T Pemberton Leigh, and on occasions ventured to elaborate on it. For example in the decision of the Hong Kong Court of Appeal in The Maule If a plaintiff wrongfully arrested a ship which he knew he could not legitimately arrest, then he would be acting in bad faith. And, short of that, if he wrongfully arrested a ship without applying his mind to whether that was a legitimate course: proceeding in that cavalier fashion because he was bent on harming the shipowner or putting pressure on him to accede to a demand, then his conduct could, in my view, be described as malicious negligence. 17 Another recent occasion where the court has elaborated on the notion of mala fides and crassa negligentia was the decision of Colman J in The Kommunar (No 3) [1997] 1 Lloyd’s Rep 22. After citing with approval that passage of the Rt Hon T Pemberton Leigh, Colman J said at 30: Two types of cases are thus envisaged. Firstly, there are cases of mala fides, which must be taken to mean those cases where on the primary evidence the arresting party has no honest belief in his entitlement to arrest the vessel. Secondly, there are those cases in which objectively there is so little basis for the arrest that it may be inferred that the arresting party did not believe in his entitlement to arrest the vessel or acted without any serious regard to whether there were adequate grounds for the arrest of the vessel. It is, as I understand the judgment, in the latter sense that such phrases as ‘crassa negligentia’ and ‘gross negligence’ are used and are described as implying malice or being equivalent to it. The reference at the end of the passage from the judgment just cited to there being circumstances which afforded grounds for believing that the arrested ship was one that had been in collision suggests that if on the evidence there is a genuine but understandable mistake as to the identity of the vessel, that will not amount to crassa negligentia. Taking the judgment as a whole, it would not appear that mere absence of reasonable care to ascertain entitlement to arrest the vessel would necessarily amount to crassa negligentia in the sense there used. 18 It was with the weight of these authorities in mind that we approached the appeal. Mr Steven Chong began his arguments for the appellant by acknowledging that the test for wrongful arrest is that of malice, but submitted that contrary to the trial judge’s rejection of the use of the term “reasonable or probable cause”, the court can infer malice where there is no “reasonable or probable cause” for arrest. In support of his submission he took us through a series of authorities that started from 1833, with a passage of Parke J in the decision of Mitchell v Jenkins (1833) 5 B & Ad 588 at p 594: I have always understood since the case of Johnstone v Sutton 1 TR 510, which was decided long before I was in the profession, that no point of law was more clearly settled than that in every action for a malicious prosecution or arrest, the plaintiff must proved what is averred in the declaration, viz that the prosecution or arrest was malicious and without reasonable or probable cause: if there be reasonable or probable cause, no malice, however distinctly proved, will make the defendant liable; but when there is no reasonable or probable cause, it is for the jury to infer malice from the facts proved. 19 Mitchell v Jenkins concerned an action for malicious arrest by a debtor against his creditor. The trial judge in that case was of the opinion that there was no probable cause for the arrest, and that there was malice in law, in causing the party to be arrested for a larger sum than he owed. The trial judge therefore told the jury that the only question for them was the amount of damages. On appeal, the court granted a new trial as it was of the opinion that the issue of malice was a finding of fact which ought to have been left to the jury. The opinion of Denman CJ, set out at pp 593–594 was that: Every arrest by a creditor for more than is due, is, in some sense a wrongful act. By statute, if it be made without reasonable or probable cause, though with an entire absence of malice, the party arresting may be deprived of his costs, and at common law, if the party arrested has suffered damage to a greater extent than those cases, he may, if the arrest was also made maliciously, bring his action on the case. In that action, however, it is still incumbent on the plaintiff to allege and to prove malice as an independent fact; though it may in some instances be fairly inferred by the jury from the arrest itself, and the circumstances under which it is made, without any other proof. They, however, are to decide, as a matter of fact, whether there be malice or not … Here, the question of malice having been wholly withdrawn from the consideration of the jury, there ought to be a new trial. 20 It is in this context that the statement of Parke J must be taken. The case did not concern the wrongful arrest of a vessel, but rather the malicious arrest of a debtor by a creditor. Neither was the issue the appropriate test for wrongful arrest. Instead the issue was whether malice was a finding of fact which ought to have been left to the jury. This can also be seen from the judgment of Parke J at p 594: I am also of the opinion that there ought to be a new trial, on the ground that the learned judge withdrew altogether from the consideration of the jury the question of malice. I have always understood since the case of Johnstone v Sutton 1 TR 510 … that no point of law was more clearly settled than that in every action for a malicious prosecution or arrest, the plaintiff must prove what is averred in the declaration, viz that the prosecution or arrest was malicious and without reasonable or probable cause: if there be reasonable or probable cause, no malice, however distinctly proved, will make the defendant liable; but when there is no reasonable or probable cause, it is for the jury to infer malice from the facts proved. That is a question in all cases for their consideration, and it having in this instance been withdrawn from them, it is impossible to say whether they might or might not have come to the conclusion that the arrest was malicious. It was for them to decide it, and not for the Judge. 21 The next case which was referred to us occurred some 60 years on from Mitchell v Jenkins, a decision of the President of the Probate, Divorce and Admiralty Division, Sir Francis H Jeune P in The Walter D Wallet [1893] P 202, who said at p 208: Still, the action of the defendants was, I think, clearly, in common law phrase, without reasonable or probable cause; or in equivalent admiralty language, the result of crassa negligentia, and in a sufficient sense mala fides, and the plaintiffs’ ship was in fact seized. 22 The dispute in that case revolved around the alleged wrongful arrest of the “Walter D Wallet” by the defendants. The defendants had agreed to sell the vessel to the plaintiffs. One of the terms of the sale was that policies of insurance approved by, and indorsed over to the sellers, covering the whole vessel to her full value, on her voyage from Liverpool to Barry, were to be given before the vessel set sail from Liverpool to Barry, and similarly before the voyage outwards from Barry. Difficulties arose in respect of the policies of insurance for the journey out from Barry. While the controversy was going on, and while the vessel had been for some days in course of loading at Barry, the defendants telegraphed their agent Mr Hamilton, at Cardiff, that he was not to interfere with the loading but must arrange to stop the vessel sailing without their authority. Mr Hamilton had been a part owner of the vessel, but had by that time transferred his share to another. Forgetting the importance of this, he issued a writ in an action of restraint as a co-owner and arrested the ship in the usual way. Under these circumstances, it was contended on behalf of the plaintiff, first, that an action lay at common law for the arrest with exemplary, or at any rate nominal damages in respect of the infringement of the plaintiff’s right of possession; secondly, that an application could be made on the same ground in an Admiralty proceeding for similar damages. 23 By the time of Sir Francis H Jeune’s decision in The Walter D Wallet in 1893, the tensions of the earlier centuries between the Courts of Common Law and the Court of Admiralty had come to an end and the Court of Admiralty had ceased to exist as an independent court. This was the result of the enactment in 1875 of the Supreme Court of Judicature Act 1873, the Supreme Court of Judicature (Commencement) Act 1874 and the Supreme Court of Judicature Act 1875, which together effected the transfer of admiralty jurisdiction to the Probate, Divorce and Admiralty Division of the High Court. Another effect of the Judicature Acts 1873 to 1875 was to change admiralty practice by the introduction of the writ of summons. Prior to that, proceedings in rem were begun by warrant of arrest, rather than by writ of summons. The enactment of the Judicature Acts 1873 to 1875 resulted in proceedings being commenced by issue of an admiralty writ in rem, and the jurisdiction of the court was not invoked until the service of the writ or the acknowledgement of the issue of the writ; see Williams and Bruce A Treatise on the Jurisdiction and Practice of the English Courts in Admiralty Actions and Appeals (3rd Ed, 1902) at pp 16–17, 249; ES Roscoe The Admiralty Jurisdiction and Practice of the High Court of Justice (5th Ed, 1931) at pp 16–17, 261; N Meeson Admiralty Jurisdiction and Practice (Lloyd’s of London Press, 1993) at p 117. 24 The action which proceeded before Sir Francis H Jeune was unusual in that the writ which was issued was a writ in an action of restraint as a co-owner when Mr Hamilton had ceased to be a co-owner. It appears that the effect of this was that the jurisdiction of the Admiralty Division was not invoked. This seems to be the reason why much of Sir Francis H Jeune’s judgment dealt with the distinction between the nature of an action at common law for the malicious arrest of a ship and the nature of a similar action before the Court of Admiralty. At pp 205–207 the learned President said: No precedent, as far as I know, can be found in the books of an action at common law for the malicious arrest of a ship by means of admiralty process … Probably the reason why no example of such an action at common law is to be found, is that superior convenience, though not exclusive jurisdiction, to which the above words refer. As the Court of Admiralty, when setting aside the arrest (which would be the preliminary to a common law action), could do full justice to the injured person, he would not, and probably could not, subsequently resort to a common law tribunal. It was, indeed, contended by counsel for the defendants that the measure of damages for malicious arrest in the Court of Admiralty was not the same as in the Courts of Common Law, and excluded, as I understood him, a demand for anything but actual pecuniary damages, capable of being estimated in exact figures. It is not, perhaps, necessary to decide this point, though, if the measure be the same, this action might be treated as an application to the Admiralty Division, and if it be not the same, the argument for a right of action at common law is strengthened; but I cannot think that the measure of damages in the Courts of Common Law and that of Admiralty is, in law, different, though possibly the different mode of determining the damages might lead in practice to different results. I know of no authority for any such proposition; in general the measure of damages for tort in the Admiralty and in the Common Law Courts is the same. The learned President’s mention of the term “reasonable or probable cause” at p 208 must consequently be taken in the context of the judgment. The action which proceeded before the learned President was an action in common law for the malicious arrest of a ship as distinct from an action in the Court of Admiralty. The learned President’s reference to the term “reasonable or probable cause”, a well established common law principle in actions of malicious prosecutions of persons, must be viewed in this light. Moreover, what was in consideration was not the appropriate test for wrongful arrest of a vessel, but whether there was a right at common law to nominal damages for the malicious arrest of a vessel where no actual damage had been proved. 25 The next case which was referred to us occurred almost a century later in Singapore. Chao Hick Tin JC (as he then was) utilised the term “reasonable or probable cause” in The Evmar With the defendants agreeing to the wording, though under protest, I think the plaintiffs should have accepted the letter of undertaking. From that moment onwards the plaintiffs had no probable or reasonable cause to continue the arrest. … The only question is whether the fact that the defendants agreed to furnish the letter of undertaking ‘under protest’ gave the plaintiffs a reasonable cause not to release the vessel. However, Chao Hick Tin JC (as he then was) did say at To succeed in a claim for damages for wrongful arrest, it is quite clear that the defendants must show that there were mala fides or malicious negligence on the part of the plaintiffs: see The Evangelismos 14 ER 945 and The Strathnaver (1875) 1 App Cas 58. … … The test to be applied to determine whether there was wrongful continuance of an arrest is the same as that applicable to wrongful arrest, ie mala fides or crassa negligentia implying malice; see The Margaret Jane (1869) 2 Adm & ECC 345. In my judgment, the plaintiff’s refusal on 14 March 1988 to accept the letter of undertaking amounted to at least malicious negligence. The arrest clearly continued unnecessarily. The plaintiffs are therefore liable for damages for the continued detention of the vessel from 14 to 15 March 1988. It is not clear from the judgment which authority the learned judge relied on for the term “reasonable or probable cause”. It is clear from the judgment however, that in awarding damages for wrongful arrest, the test applied was that of The Evangelismos of mala fides or crassa negligentia. 26 The term “reasonable or probable cause” was also used by GP Selvam JC (as he then was) in The Ohm Mariana The true basis of the claim therefore is, to use the common law phrase, ‘without reasonable or probable cause’, and to use the admiralty language ‘crassa negligentia or mala fides’. (See ‘The Walter D Wallet’ and ‘The Strathnaver.’) In so far as reliance is placed on the decisions in Mitchell v Jenkins and The Walter D Wallet, we were, with the greatest respect to the learned judge, unable to agree with such an approach. As noted above, Mitchell v Jenkins was a case which dealt with malicious prosecution of persons and the issue was whether malice was a finding of fact which ought to be left to the jury. The Walter D Wallet was an action in common law for damages arising from the arrest and consequently adopted the language of the common law action for malicious prosecution. 27 We are grateful to Mr Chong for raising the above authorities. From our considered examination of the cases, the historical origin for the term “reasonable and probable cause” dates back to at least over a century and a half, and derives from the action for malicious prosecution of persons. While the use of the term “reasonable and probable cause” is well established in actions for malicious prosecution, we are uncomfortable with the import of such a term into admiralty law as part of the test for wrongful arrest for a vessel. The accepted definition of ‘reasonable and probable cause’ for actions of malicious prosecution is that of Hawkins J in Hicks v Faulkner (1881) 8 QBD 167, a definition which was adopted by the House of Lords in Herniman v Smith Now I should define reasonable and probable cause to be, an honest belief in the guilt of the accused based upon a full conviction, founded upon reasonable grounds, of the existence of a state of circumstances, which, assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the accuser, to the conclusion that the person charged was probably guilty of the crime imputed. Where a person is prosecuted for a crime, the standard of proof is that of “beyond reasonable doubt”. To say that there is malicious prosecution when a person does not have reasonable grounds which would lead him to the conclusion that the person charged was probably guilty, therefore pegs the threshold for malicious prosecution at a different level from that which is necessary for the criminal prosecution to succeed. 28 In a civil case however, the standard of proof is on “a balance of probabilities”. In the context of a civil action, Hawkins J’s definition of “reasonable or probable cause” would be paraphrased as an honest belief in the action, founded upon reasonable grounds which would lead an ordinarily prudent and cautious man to the conclusion that the action would probably succeed. In our view, this would be too similar to the standard of proof for civil cases and would suggest that a plaintiff who fails in his action on a balance of probabilities is liable to pay damages for wrongful arrest. That would be stating the threshold for wrongful arrest of a vessel at too low a level, and would discourage potential plaintiffs from pursuing their claims because of the heavy damages which they might incur if they are subsequently unable to prove their claim at trial. 29 We were therefore of the opinion that the term “reasonable or probable cause” is not appropriate in the context of the wrongful arrest of a vessel, as it would cause confusion, and more importantly dilute the threshold required for an action in wrongful arrest to succeed. 30 In light of the above, we were of the view that the test to be proved by the owners was not whether there was reasonable or probable cause in bringing the action or in rejecting the security offered in March 1996. Instead the test is that laid down by the Rt Hon T Pemberton Leigh in The Evangelismos of mala fides or gross negligence implying malice. In the context of the appeal, the question would be this; in bringing the action against the owners, did Fal know or honestly belief that they could not legitimately arrest the ship so as to imply malice, or in arresting the vessel, did Fal fail to apply their mind as to whether they could legitimately arrest the vessel, and nevertheless proceeding to arrest the vessel because Fal was bent on putting pressure on the owners to accede to their demand, so as to imply gross negligence; and in refusing the security offered by the owners in March 1996, was Fal’s refusal malicious or grossly negligent. Whether there was malice or gross negligence in bringing the action 31 Mr Chong argued that there was malice or gross negligence in bringing the action because on the evidence, it was clear that prior to the arrest and at the time of the arrest, the only basis of Fal’s claim was the alleged contractual maritime lien based on cl 3.4. He argued that this was gross negligence since Fal clearly did not have a maritime lien under Singapore law, a fact which they could have easily ascertained prior to the arrest. 32 However, while Fal’s claim did proceed on the basis of cl 3.4, their claim was not premised solely on a maritime lien. Besides the maritime lien, cl 3.4 also states that the delivery of the marine oil is “on the faith and credit of the vessel”. It was also on the basis of this phrase that Fal proceeded. 33 In support of the contention that Fal’s initial argument was premised solely on the maritime lien, reference was made to a letter by Fal to Ince and Co dated 18 March 1996, where it is stated that Fal has a “privilege” on the vessel. Mr Chong noted that Shiraz Babrawalla, witness for Fal said under cross-examination that when they mentioned “privilege” they were referring to the maritime lien on the vessel. The value of this letter is however doubtful. It was written on 18 March 1996, at a time when it was not known where the vessel would be arrested. There are jurisdictions where Fal might have a maritime lien over the vessel by virtue of cl 3.4. This was acknowledged by Mr Chong in his submissions, and also averred to by Clarke J in The Yuta Bondarovskaya [1998] 2 Lloyd’s Rep 357 at p 366 where the learned judge said: In some countries, including I think the United States of America, a bunker supplier has a maritime lien over the vessel. That may, indeed be the reason for the formulation of cl 11 of the terms and conditions of IMS, which are, of course, governed by the law of the United States of America, although precisely which such law may be less clear. It would therefore have made sense for Fal to refer to the maritime lien in their letter as it was possible that they would have a maritime lien, depending on where they arrested the vessel. Taking into consideration the fact that this letter was not written with arrest in Singapore specifically in mind, but to arrest somewhere in the world, and the fact that there are some jurisdictions in the world where Fal would have a maritime lien, it would be wrong to use this letter as an indication that Fal’s sole premise for their claim in Singapore was a maritime lien, which if they had checked, would have realised did not exist. 34 Mr Chong also argued that Fal’s malice or gross negligence in bringing their action was evident from the many changes their lawyers made to the factual matrix on which the claim was based. He acknowledged that reformulation of arguments do occur, but argued that when a party adopts different legal arguments, they do so on the same factual matrix. In the present case, the changes made to the factual matrix implied that the action was an experiment. Reference was made to the 1860 case of The Victor (1866) 167 ER 38, a decision of Dr Lushington, a great admiralty judge of the nineteenth century. In that case, there was a collision between the “Vrede” and the “Victor”. Cargo on board the “Victor” was arrested by the owners of the “Vrede” to make good any deficiency arising from the proceeds of the “Victor”. The learned judge said at pp 40–41: The first question is, whether the cargo laden on board a ship doing damage is like the ship itself, liable in this court for the damage? I believe there is no precedent whatever to support the affirmative of this proposition. I believe that in former times it was not unusual to proceed by arrest of the person in the first instance, but I know of no instance in which the court has arrested a cargo for the purpose of making good the damage done by the ship in which it was conveyed, and I conceive the reasons against such a course are most powerful … What I have already said disposes of the whole case, and renders it unnecessary to consider the question of fact as to the ownership of the cargo. It only remains to say, that where an experiment of this kind is made and it fails, the Court must give costs and damages. 35 In his subsequent decision in The Volant (1864) 22 BR & L 321 at 323; 167 ER 385 at 386, Dr Lushington noted of his judgment in The Victor: The case of The “Victor”71 Lush 72, which has been referred to, was one in which, in a cause of collision, the plaintiff endeavoured to make the cargo of the opposing ship liable for his loss — a mere experiment, and an experiment contrary to the long practice of the Court, and the elementary principles of law. 36 Unlike the proceedings in The Victor, the claim by Fal for the price of the marine oil was not clearly an experiment which was contrary to the long practice of the court or the elementary principles of law. The claim involved a relatively complicated set of facts, with a number of parties involved in a chain of back-to-back transactions for bunker supplies and required relatively complex analysis of contractual matters on which views may differ and change. Although the factual matrix did change, the changes were made within the periphery of the essential facts and were made in order that Fal could proceed on what their lawyers perceived as the most suitable factual matrix to base their argument that the owners were contractually liable. The changes to the factual matrix for Fal’s case in such a situation did not, in our view, imply that Fal were malicious or grossly negligent in bringing their action. 37 We were for these reasons, of the opinion that there was no malice or gross negligence on the part of Fal in bringing the action. Whether there was malice or gross negligence in refusing the security 38 Mr Chong argued alternatively that Fal was malicious or grossly negligent in refusing the security offered in March 1996. He observed that when the Kiku Pacific was arrested in Singapore in July 1996, she was released on an undertaking from the London Steamship P&I Club which was similar to the undertaking offered prior to the arrest in March 1996, except that jurisdiction was in Singapore instead of England. It was argued that there is no difference in Singapore and England in respect of Fal’s claim and that on hindsight, there was no valid reason for Fal to reject the undertaking of March 1996. 39 As authority, the decision of Chao Hick Tin JC (as he then was) in The Evmar was relied on. The facts of The Evmar are however different from the present case and that decision is therefore not relevant. In The Evmar the vessel was already under arrest. The defendant put up security in precisely the terms insisted upon by the plaintiffs. The plaintiffs however refused to accept the security because the defendant offered the security under protest and insisted on a bail bond. It was held that from the time the letter of undertaking was handed over in the wording as proposed by the plaintiffs, the plaintiffs should have accepted the letter of undertaking and that the plaintiff’s refusal to do so amounted at least to malicious negligence. 40 In contrast, when the security was offered in March 1996, the vessel had yet to be arrested. Furthermore, the security put up by the owners was not in the exact terms insisted upon by Fal. These were two crucial facts present in The Evmar which are not present in the case at hand. More importantly, at the time when Fal refused the security, it was uncertain where the vessel would be arrested and they had good reason and were clearly entitled to insist that jurisdiction would be that of the UAE. 41 The subsequent acceptance of a similar undertaking with Singapore jurisdiction does not in any way taint the initial rejection with malice or gross negligence. Mr Chong argued that there was malice or gross negligence because Fal’s reason for rejecting the undertaking of March 1996 was a groundless one as the law in Singapore and England are the same. However at the time that Fal rejected the initial security in March 1996, they had no idea where the vessel would, if possible, be arrested. It could easily have been that the vessel would be arrested in a state where the jurisdiction was not similar to that of England, and would be one that Fal deemed more favourable. It cannot therefore be said that Fal’s rejection of the initial offer of security was groundless. The fact that Fal did finally decide to arrest the vessel in Singapore does not impugn on the reason for their initial rejection, as the place of arrest was a matter in which Fal were constrained by the commercial realities of the vessel’s routes and the opportunities that presented themselves for an arrest. 42 It was difficult to use Fal’s decision to accept security with jurisdiction in Singapore to imply that the initial rejection was malicious or grossly negligent, as Fal’s subsequent change of mind could have been the result of commercial or legal considerations that arose after the initial rejection of March 1996. One possible consideration that Fal might have had in deciding whether to accept the security offered in July 1996 was whether they would be regarded as wrongfully continuing to arrest the vessel if they rejected the security offered, not unlike the situation in The Evmar. In spite of the fact that they might still have wanted jurisdiction in UAE, they may have chosen to accept the security with jurisdiction in Singapore so as to avoid any risk of wrongful arrest. 43 We were for these reasons, of the opinion that Fal’s rejection of the security offered in March 1996 was not malicious or grossly negligent. Fal’s claim for the costs of the counterclaim 44 At the appeal, Mr Haridass Ajaib, on behalf of Fal submitted that the trial judge’s decision not to make any order as to costs of the counterclaim should be reversed and that the owners should be ordered to pay for the costs of the counterclaim. 45 The trial judge’s decision not to order costs for the counterclaim was based on his view that Fal had “sailed very close to the wind in bringing this action against the defendants, and refusing their offer of security” and that Fal’s cause of action was “palpably weak”. While we were unable to agree with Fal’s arguments on their claim for the price of the marine oil, we were not of the view that it was entirely without merit and “palpably weak”. Neither were we of that view in respect of Fal’s rejection of the initial offer of security. The trial judge’s decision on costs was therefore reversed and the costs of the counterclaim awarded to Fal. Conclusion 46 For the reasons given above, the appeal was dismissed and the costs of the counterclaim and the appeal awarded to Fal. Appeal dismissed. Reported by Kwek Mean Luck