Meck Petroleum DMCC v Owner of VICTOR 1: Admiralty Claim & Demise Charter After Judicial Sale
In Meck Petroleum DMCC v Owner and/or Demise Charterer of the vessel “VICTOR 1”, the General Division of the High Court of Singapore addressed whether a demise charter survives a judicial sale, allowing an in rem action against the sale proceeds when the liability lies against the demise charterer. Meck Petroleum DMCC (“Meck”) commenced an action in rem against the sale proceeds of the vessel “VICTOR 1”, which had been demise chartered by Savory Shipping Inc (“Savory”) to Ceto Shipping Corporation (“Ceto”). The court dismissed the appeals, except for the costs orders, finding that the demise charter did not survive the judicial sale.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Appeals dismissed save for Meck and Ceto’s appeals against the Assistant Registrar’s costs orders, which were allowed in part.
1.3 Case Type
Admiralty
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The case concerns whether a demise charter survives a judicial sale, allowing an in rem action against sale proceeds when liability lies with the demise charterer. The court dismissed the appeals.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Meck Petroleum DMCC | Claimant | Corporation | Appeal Dismissed in Part | Partial | |
| Owner and/or Demise Charterer of the vessel “VICTOR 1” (IMO No. 9283722) | Defendant | Other | Appeal Dismissed | Lost | |
| Owner of the vessel “VICTOR 1” (IMO No. 9283722) | Defendant | Other | Appeal Won in Part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judge of the High Court | Yes |
4. Counsels
4. Facts
- The vessel “VICTOR 1” was demise chartered by Savory Shipping Inc to Ceto Shipping Corporation.
- The vessel was arrested and judicially sold in one action in rem.
- Meck Petroleum DMCC commenced an action in rem against the sale proceeds of the vessel.
- Ceto filed a Notice of Intention to Contest (NIC) in ADM 26 as the owner and/or demise charterer of the vessel.
- Savory applied for orders that Ceto’s NIC and Meck’s claim in ADM 26 against the “demise charterer” of the Vessel be struck out.
- The Charterparty was later supplemented by an addendum dated 24 December 2019.
- The vessel was eventually sold for SGD15,422,601.00 on 16 January 2023 and the sale proceeds were paid into court.
5. Formal Citations
- The “VICTOR 1”, Admiralty in Rem No 26 of 2023 (Registrar’s Appeals Nos 1 and 2 of 2024), [2024] SGHC 165
6. Timeline
| Date | Event |
|---|---|
| Charterparty dated | |
| Charterparty supplemented by an addendum | |
| Unpaid bunkers supplied to the Vessel | |
| Unpaid bunkers supplied to the Vessel | |
| Vessel arrested in HC/ADM 19/2022 | |
| Charter period terminated | |
| Savory filed a caveat against the Vessel’s release in ADM 19 | |
| Vessel’s appraisal and sale pendente lite was ordered | |
| Vessel sold for SGD15,422,601.00 | |
| Meck commenced ADM 26 | |
| Ceto filed its NIC in ADM 26 | |
| Meck filed its Statement of Claim in ADM 26 | |
| Meck informed the court of the parties’ intention to record a consent judgment | |
| Consent Judgment recorded | |
| Savory filed its NIC in ADM 26 | |
| Savory applied for orders that Ceto’s NIC and Meck’s claim in ADM 26 against the “demise charterer” of the Vessel be struck out | |
| SUM 3438 was heard by the AR | |
| Hearing date | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Survival of Demise Charter After Judicial Sale
- Outcome: The court held that the demise charter did not survive the judicial sale.
- Category: Substantive
- Sub-Issues:
- Effect of judicial sale on charterparty
- Termination of charterparty
- Constructive redelivery
- Beneficial Ownership of Vessel
- Outcome: The court held that Ceto did not acquire beneficial title to the Vessel pursuant to cl 39.1.
- Category: Substantive
- Sub-Issues:
- Conditional sale agreement
- Payment obligations
- Transfer of title
8. Remedies Sought
- Claim against sale proceeds of vessel
9. Cause of Actions
- Admiralty claim for unpaid bunkers
10. Practice Areas
- Admiralty
- Shipping
- Commercial Litigation
11. Industries
- Shipping
- Petroleum
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| The “Bunga Melati 5” | Court of Appeal | Yes | [2012] 4 SLR 546 | Singapore | Cited for the five-step test that a claimant must satisfy in order to validly invoke admiralty jurisdiction pursuant to s 4(4) HCAJA. |
| The “Min Rui” | Unknown | Yes | [2016] 5 SLR 667 | Singapore | Cited for the principle that an action in rem is “brought” at the time the writ in rem (now originating claim in rem) is issued and that a vessel’s certificate of registration is prima facie evidence of legal and beneficial ownership. |
| The “Turtle Bay” | Unknown | Yes | [2013] 4 SLR 615 | Singapore | Cited for the principle that upon the completion of the judicial sale of a vessel, clean title passes to the purchaser free from all liens and encumbrances. |
| The “Acrux” | Unknown | Yes | [1962] 1 Lloyd’s Rep 405 | Unknown | Cited for the legal fiction by which the vessel’s sale proceeds are treated as notionally representing the vessel. |
| The Convenience Container & Ors | Unknown | Yes | [2007] 4 HKC 484 | Hong Kong | Cited for the legal fiction by which the vessel’s sale proceeds are treated as notionally representing the vessel. |
| The “Chem Orchid” | Unknown | Yes | [2015] 2 SLR 1020 | Singapore | Cited for the hallmark of the demise charter is the transfer of possession and control of the vessel from the owner to the charterer. |
| The “Tarik III” | Supreme Court of Appeal | Yes | [2022] ZASCA 136 | South Africa | Cited for the proposition that admiralty claims against a demise charterer may be pursued via an action in rem commenced even after the vessel has been judicially sold. |
| Patrick Stevedores No 2 Pty Ltd v MV “Turakina” | Unknown | Yes | (1998) 154 ALR 666 | Australia | Cited regarding constructive redelivery. |
| Wei Hsing Food (S) Pte Ltd v The Owners or Demise Charterers of The Ship or Vessel ‘The Neptune’ | Unknown | Yes | [2005] 5 MLJ 702 | Singapore | Cited for the principle that a party is entitled as of right to enter an appearance in an action in rem as the defendant so long as that party answers to the requirements of the ‘relevant person’ as set out in s 4(4) HCAJA. |
| Bevin v Smith | Unknown | Yes | [1994] 3 NZLR 648 | New Zealand | Cited for the proposition that the equitable interest of a purchaser always is contingent upon payment of the purchase price in due time and performance of any other obligations arising as terms of the settlement. |
| The “Pangkalan Susu/Permina 3001” | Court of Appeal | Yes | [1977-1978] SLR(R) 105 | Singapore | Cited regarding beneficial ownership. |
| Ceto Shipping Corporation v Savory Shipping Inc | English High Court | Yes | [2022] EWHC 2636 (Comm) | England and Wales | Cited for the interpretation of clause 39.1. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| High Court (Admiralty Jurisdiction) Act 1961 | Singapore |
| High Court (Admiralty Jurisdiction) Act 1961 (2020 Rev Ed) s 4(4) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Demise charter
- Judicial sale
- Action in rem
- Sale proceeds
- Beneficial ownership
- Charterparty
- Originating claim in rem
- Notice of Intention to Contest
- Barecon 2001
- Constructive redelivery
15.2 Keywords
- Admiralty
- Shipping
- Demise Charter
- Judicial Sale
- VICTOR 1
- Meck Petroleum
- Ceto Shipping
- Savory Shipping
17. Areas of Law
16. Subjects
- Admiralty
- Shipping
- Charterparties
- Civil Procedure