AKN Marine Supplies v PWM Supply: Admiralty Claim for Ship Management Fees

AKN Marine Supplies Pte Ltd sued the owners of the ship "PWM Supply" (PWM Singapore Pte Ltd) in the High Court of Singapore for unpaid ship management fees and expenses. PWM counterclaimed for damages, alleging AKN Marine obstructed the sale of the vessel. The court, presided over by Senior Judge Tan Lee Meng, ruled in favor of AKN Marine for the sums owed for disbursements, but rejected the claims for book-keeping, administrative and management fees. The court dismissed PWM's counterclaim, finding AKN Marine was justified in maintaining its action.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff in part; Counterclaim dismissed.

1.3 Case Type

Admiralty

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

AKN Marine sued PWM Supply for unpaid ship management fees. The court allowed the claim for disbursements but rejected the claim for management fees.

1.7 Decision Date

22 June 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
AKN Marine Supplies Pte Ltd	Plaintiff	Corporation	Judgment for Plaintiff in part, Judgment for Plaintiff in part, Judgment for Plaintiff in part, Judgment for Plaintiff in part	Partial, Partial, Partial, Partial	Christopher Anand s/o Daniel, Ganga d/o Avadiar, Harjean Kaur
The Owners of the Ship or Vessel “PWM Supply” ex “Crest Supply 1”	Defendant	Other	Counterclaim dismissed	Dismissed	Lawrence Teh Kee Wee, Loh Jen Wei, Khoo Eu Shen

3. Judges

Judge Name	Title	Delivered Judgment
Tan Lee Meng	Senior Judge	Yes

4. Counsels

Counsel Name	Organization
Christopher Anand s/o Daniel	Advocatus Law LLP
Ganga d/o Avadiar	Advocatus Law LLP
Harjean Kaur	Advocatus Law LLP
Lawrence Teh Kee Wee	Dentons Rodyk & Davidson LLP
Loh Jen Wei	Dentons Rodyk & Davidson LLP
Khoo Eu Shen	Dentons Rodyk & Davidson LLP

4. Facts

AKN Marine sued PWM to recover costs for services rendered as ship manager/agent of the Vessel.
PWM counterclaimed, alleging AKN Marine impeded its efforts to sell the Vessel to Kith Marine.
PWM's directors resolved to wind up the company voluntarily, resulting in a stay of proceedings.
AKN Marine claimed sums for services, expenses, and disbursements as ship managers.
PWM conceded owing AKN Marine S$412,196.42 and US$133,919.32 for true disbursements.
AKN Marine also claimed book-keeping, administrative fees, and management fees.
PWM alleged AKN Marine obstructed the sale by denying access to Kith Marine's representatives.
Kith Marine terminated the MOA due to PWM's failure to deliver the Vessel within the stipulated time.
Deutsche Bank commenced action to recover the sum owed to it under the credit facility.
The Vessel was sold by the Sheriff, and the sale proceeds were paid into court.

5. Formal Citations

The “PWM Supply” ex “Crest Supply 1”, Admiralty in Rem No 26 of 2011, [2016] SGHC 117

6. Timeline

Date	Event
2006-02-10	AKN Marine agreed to purchase the Vessel from Pacific Crest Pte Ltd.
2010-03-24	Agreement for the sale and purchase of the Vessel was amended to reflect the Vessel’s change of name.
2006-04-28	PWM was incorporated.
2006-04-28	AKN Marine agreed to let PWM take over the purchase of the Vessel from Pacific Crest.
2006-06-20	Novation agreement executed to have PWM recorded as the purchaser of the Vessel.
2006-05-16	PWM appointed AKN Marine as the Vessel’s managers.
2006-03-08	AKN Marine sub-contracted the management of the Vessel to Strato Maritime Services Pte Ltd.
2006-06-23	The Vessel was registered in PWM’s name and renamed “PWM Supply”.
2010-11-26	AKN Marine requested payment of US$191,426.28 allegedly owed by PWM to AKN Marine.
2011-01-16	AKN Marine emailed PWM stating intent to arrest the Vessel unless PWM paid the amount owed.
2011-02-01	Deutsche Bank rejected PWM's request for deferment of payment and gave PWM two months to sell the Vessel.
2011-02-07	AKN Marine commenced the present action to recover the monies claimed by it from PWM.
2011-02-21	PWM entered into a Memorandum of Agreement with Kith Marine for the sale of the Vessel at US$3.2m.
2011-02-24	Jamal's solicitors informed PWM's solicitors that Jamal would be commencing a suit for the transfer of 85% of the shares in PWM to him.
2011-03-09	Kith Marine terminated the MOA.
2011-03-14	Mark informed Deutsche Bank that Kith Marine may still be interested in purchasing the Vessel but was now offering to pay between US$2.5m to US$2.8m.
2011-03-22	PWM put on record that Kith Marine had already terminated the MOA for the sale and purchase of the Vessel at US$3.2m.
2011-04-06	Deutsche Bank commenced Admiralty in Rem No 72 of 2011 to recover the sum of approximately €1,134,208.93.
2011-04-06	Deutsche Bank applied to arrest the Vessel.
2011-04-21	AKN Marine informed Strato Maritime’s solicitors that AKN Marine would not object to the handing over of the Vessel to PWM.
2011-04-26	The court declared that PWM was entitled to possession of the Vessel and ordered costs against AKN Marine.
2011-04-26	The court ordered that the Vessel be sold pendente lite.
2011-05-11	The writ with respect to the present action was finally served by AKN Marine on the Vessel.
2011-05-16	PWM entered unconditional appearance in the action.
2011-06-01	The Vessel was sold by the Sheriff for S$3,666,434.41.
2011-06-13	PWM filed its Defence and Counterclaim in the present action.
2012-07-16	Trial began.
2013-03-07	Trial completed.
2013-03-26	PWM’s directors passed a resolution to have the company wound up voluntarily.
2013-04-05	Borrelli Walsh Pte Ltd was confirmed as PWM’s liquidator.
2013-09-24	The stay of proceedings was lifted on the liquidator’s application.
2016-05-23	Judgment reserved.
2016-06-23	Judgment delivered.

7. Legal Issues

Admiralty Jurisdiction
- Outcome: The court held that claims for true disbursements fall within the admiralty jurisdiction, but claims for book-keeping, administrative and management fees do not.
- Category: Jurisdictional
- Sub-Issues:
  - In rem action
  - Disbursements on account of a ship
Breach of Contract
- Outcome: The court held that AKN Marine did not breach the Management Agreement by refusing to withdraw the present action to facilitate the sale of the Vessel.
- Category: Substantive
- Sub-Issues:
  - Failure to supervise sale of vessel
  - Failure to cooperate in giving access to vessel
Damages for Loss of Chance
- Outcome: The court held that PWM did not prove that it lost a real or substantial chance of completing the sale of the Vessel due to AKN Marine's actions.
- Category: Substantive
- Sub-Issues:
  - Causation of loss
  - Real or substantial chance
Conversion
- Outcome: The court dismissed PWM's counterclaim for conversion, finding that AKN Marine was entitled to refuse to withdraw the present action.
- Category: Substantive
- Sub-Issues:
  - Interference with ownership
  - Refusal to grant access to vessel
Trespass
- Outcome: The court dismissed PWM's counterclaim for trespass, finding that AKN Marine was entitled to refuse to withdraw the present action.
- Category: Substantive
- Sub-Issues:
  - Interference with possession
  - Failure to accord access to vessel
Action in personam
- Outcome: The court held that AKN Marine is entitled to judgment in personam for the book-keeping and administrative fees as well as the management fees because PWM entered unconditional appearance in the present action.
- Category: Procedural
- Sub-Issues:
  - Unconditional appearance
  - Submission to jurisdiction

8. Remedies Sought

Monetary Damages
Interest
Costs

9. Cause of Actions

Breach of Contract
Conversion
Trespass
Claim for disbursements

10. Practice Areas

Admiralty
Ship Management
Commercial Litigation

11. Industries

Shipping

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
The “Orienta”	English Court of Appeal	Yes	[1895] P 49	England	Cited to define the meaning of 'disbursements' in Admiralty practice, specifically in the context of payments by the master of a ship.
Bain Clarkson Ltd v The Owners of the Ship “Sea Friends”	N/A	Yes	[1991] 2 Lloyd’s Rep 322	England	Cited to illustrate that insurance premiums are not disbursements as they are for a shipowner's financial comfort and not to keep the vessel going.
The “Westport” (No. 3)	N/A	Yes	[1966] 1 Lloyds’ Rep 342	England	Cited for the proposition that ship management fees fall within the ambit of an in rem action, although the current judgment ultimately disagrees with this view.
Patrick Stevedores No 2 Pty Ltd v the proceeds of the sale of the vessel MV “Skulptor Konenkov”	N/A	Yes	[1997] FCA 1634	Australia	Cited for the principle that an agent's commission is payable for services to the shipowner and is not a disbursement on account of the ship.
Opal Maritime Agencies Pty Ltd v “Skulptor Konenkov”	N/A	Yes	[2000] FCA 507	Australia	Cited to show that the decision in Patrick Stevedores No 2 Pty Ltd v the proceeds of the sale of the vessel MV “Skulptor Konenkov” was affirmed on appeal.
Oceanic Group Pte Ltd & Anor v The Owners and/or Demise Charterers of the Ship or Vessel “Oriental Dragon”	Hong Kong Court of First Instance	Yes	[2014] 1 HKLRD 649	Hong Kong	Cited as a case where the Hong Kong Court of First Instance held that a ship manager is entitled to arrest a vessel for a lump sum fee that included a fee payable with respect to “ship management”.
The Ruby Star	Hong Kong Court of Appeal	Yes	[2015] 1 HKLRD 543	Hong Kong	Cited for the view that management fees are not within the ambit of an in rem claim.
The “Nagasaki Spirit”	N/A	Yes	[1993] 3 SLR(R) 891	Singapore	Cited for the principle that there is no room in Singapore for a hybrid writ that includes in rem and non-in rem claims.
The Gemma	N/A	Yes	[1899] P 285	England	Cited for the principle that once a defendant in an admiralty action in rem has entered an appearance, the action continues against him not only as an action in rem but also as an action in personam.
The “August Eighth”	Privy Council	Yes	[1983-1984] SLR(R) 1	Singapore	Cited for the principle that once a defendant in an admiralty action in rem has entered an appearance in such action, he has submitted himself personally to the jurisdiction of the English Admiralty Court, and the result of that is that, from then on, the action continues against him not only as an action in rem but also as an action in personam.
The “Ohm Mariana” ex “Peony”	Court of Appeal	Yes	[1993] 2 SLR(R) 113	Singapore	Cited for the principle that even if an action in rem was instituted in error, the action could proceed as an action in personam if the defendant entered an appearance unconditionally.
The “Trade Resolve”	N/A	Yes	[1999] 2 SLR(R) 107	Singapore	Cited for the principle that by entering an appearance, the defendants had submitted personally to the jurisdiction of the court and the action would continue as an action only in personam.
The “Cheapside”	English Court of Appeal	Yes	[1904] P 339	England	Cited for the principle that a judge in an admiralty action does not cease to be a judge of the High Court because he is judge of the Court of Admiralty, and whether or not he can blend those two jurisdictions is a matter for his discretion.
The Owners of the Ship or Vessel “Siti Ayu”and “Melati Jaya” v Sarawak Oil Palm Sdn Bhd & Anor	Malaysian Court of Appeal	Yes	[2006] 1 MLJ 630	Malaysia	Cited for following the decision in The “Cheapside” and supporting the practical approach of hearing a counterclaim in personam in an action in rem.
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd and another	Court of Appeal	Yes	[2005] 1 SLR(R) 661	Singapore	Cited for the principles on awarding damages for loss of a chance, specifically that the chance lost must be a real or substantial one.
Allied Maples Group Ltd v Simmons & Simmons	N/A	Yes	[1995] 1 WLR 1602	England	Cited for the principle that the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one.
The “Catur Samudra”	N/A	Yes	[2010] 2 SLR 518	Singapore	Cited for the principle that ship managers are not in possession or control of a vessel, and if they exercise any right of control or possession, they do so on behalf of the shipowners.
The “Arktis Fighter”	N/A	Yes	[2001] 2 SLR(R) 157	Singapore	Cited for the principle that once the court is satisfied that a vessel has been lawfully arrested, it will order its release only upon adequate security being furnished.
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd and Another	High Court	Yes	[2007] SGHC 50	Singapore	Cited to show that there was a separate hearing for the assessment of damages in Asia Hotel.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Ship Management Fees
Disbursements
Action in Rem
Action in Personam
Memorandum of Agreement
Encumbrances
Loss of Chance
Voluntary winding up
Liquidator
Judicial Sale

15.2 Keywords

Admiralty
Shipping
Ship Management
Disbursements
In Rem
In Personam
Singapore

16. Subjects

Admiralty
Shipping
Contract Law
Civil Procedure

17. Areas of Law

Admiralty Law
Shipping Law
Contract Law
Civil Procedure