Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

Grimberg JC (delivering oral judgment):

1           I take the view that O 70 r 12(4) gives me the discretion to order the release of this vessel against the provision of a P & I Club letter of guarantee. P & I Clubs are now acknowledged as being part and parcel of the maritime industry. The unreported New Zealand case, The Pacific Charger (CA, NZ, unreported) [a report of this judgment appears at [1988] 3 MLJ 263], to which Mr Selvam referred, establishes that a Club guarantee has been considered acceptable security by the court in New Zealand. In that case the scope of the New Zealand equivalent of our O 70 r 12(4) was considered. It is obvious, too, from the textbooks, that Club security has become acceptable as a matter of course, when negotiations for security take place outside the rules of court.

2           There is admittedly a wrinkle, a very important wrinkle, in this case in that here we are dealing with a proposed letter of guarantee to be furnished by a Club which has no presence or assets here, and which resides in a non-Commonwealth and non-common law jurisdiction. Therefore, theoretically, there could be an enforcement problem. However, it seems to me that to allow that possibility to affect my mind would be to adopt a wholly negative approach. I prefer to proceed upon the assumption that the Japan Club — whose guarantees (as the evidence shows) are acceptable to a number of governments, including our own — that such a club which would stand to lose its international reputation were it to default on a guarantee — would fulfil its obligations with honour. Accordingly, I am inclined to order the release of the vessel in consideration of the provision of a letter of guarantee of the Japan Club in terms to be agreed.

3           I am faced, having made that decision, with the other difficulty arising from the lack of consensus on quantum, coupled with the urgency of the matter. I was informed by Mr Selvam this morning that the vessel is seaworthy, and but for the fact that she is currently under arrest, would sail. I had in mind the possibility of adjourning this application with liberty to restore, so as to enable either the plaintiff or defendant to apply for an order of appraisal under O 70 r 22. However, that would obviously take time, to the detriment of the defendant. I am also influenced against this course by the fact that Mr Selvam has indicated to me that the defendant would be prepared to procure a guarantee of the Club in the sum of $26m, which is substantially the security the plaintiff wants, although it is required by the plaintiff in another form.

4           As to quantum therefore, I have on the one hand the valuation of approximately $20m given by Mr Peirera, who is a surveyor recognized by this court. That figure is challenged by the plaintiff, who has put forward the valuation of another surveyor who is less well-known in this jurisdiction, but those constituent companies have antecedents with which I cannot possibly take issue.

5           I have to consider the merits of the two valuations. I am unpressed by the point made by Mr Karthigesu concerning the fact that Mr Peirera’s valuationwas arrived it on a forced sale basis. I am not persuaded that this is the basis upon which the valuation ought to have been prepared, and I am inclined to prefer the valuation of Mr Bando, the defendant’s valuer.

6           I am therefore going to make the following orders:

(a)       an order in terms of prayer 1, abridging the time for service of this application;

(b)      an order ill terms of prayer 2, save that the figure will read $26m instead of $19.7m;

(c)       there will be an order in terms of prayer 3 of the application;

(d)      the costs of this application will be reserved. There will be liberty to either party to apply.

7           I hope that the parties will be able to agree on the terms of the guarantee. Certainly you are welcome to come back to me if you think I can assist in any way.

Order accordingly.