THE “SONGA VENUS”

[2020] SGHC 74, Singapore High Court, Pang Khang Chau J, 15 April 2020

Admiralty – Action in rem – Priorities – Possessory lien – Costs of enforcing the claim – Claimant having possessory lien over arrested ship – Claim having priority as statutory lien – Whether claimant’s costs in enforcing the claim having same priority as possessory lien or statutory lien

The plaintiff, Keppel FELS Ltd provided various services to the vessel Songa Venus including repairs, modifications, supply of materials and equipment as well as berthing. Having failed to obtain payment for the said services from the owner of the vessel, Keppel FELS commenced proceedings, arrested the vessel, and obtained an order for the vessel to be appraised and sold pendente lite “without prejudice to [Keppel FELS’] possessory lien over the Vessel, if any”. Pursuant to the order, the vessel and the bunkers on board were sold by the Sheriff for US$3,749,463.14. Keppel FELS obtained final judgment in default of appearance for the sum of US$1,169,370 with interest. In granting the final judgment, the judge had also declared that Keppel FELS had a possessory lien over the vessel in respect of the portion of its claim relating to repair and modification works, as well as supply of various materials, equipment and services. The intervener, Songa Offshore SE, commenced a separate in rem action against the vessel for sums outstanding under a seller’s credit agreement which was secured by a second preferred mortgage over the vessel and obtained final judgment in default of appearance for the sum of US$34,200,000. The parties agreed on the priority of the relevant claims for payment out of the proceeds of sale, but a dispute arose as to the treatment of the costs of the action. Where a claimant had a possessory lien over an arrested ship in respect of a claim which, but for the possessory lien, would have priority only as a statutory lien in admiralty, should the claimant’s costs in enforcing the claim be accorded the same priority as the possessory lien or the statutory lien? The defendant argued, first, that the common law possessory lien was a passive remedy which conferred no right of action. Secondly, the common law possessory lien was accorded a high priority by the Admiralty Court as part of the Admiralty Court’s undertaking to protect the possessory lien in return for the possessory lien holder giving up possession of the vessel. This was so that a judicial sale could be conducted for the benefit of all parties having in rem claims against the vessel. This undertaking extended only to claims properly coming within the scope of the possessory lien and no more.