Singapore High Court disallows discontinuance of plaintiff’s admiralty action, preserving intervener’s right to pursue claim for wrongful arrest
27 September 2019
The “King Darwin” [2019] SGHC 177
In the recent case of The “King Darwin”, the Singapore High Court considered whether a plaintiff’s discontinuance of its admiralty action (“Action”) should be allowed in circumstances where the intervener’s claim for wrongful arrest, brought within the Action, was pending.
In exercising its inherent jurisdiction, the court found that the special circumstances (the essential touchstone being that of “need”) warranting the exercise of its inherent powers were met and the discontinuance of the Action was disallowed to prevent injustice to the Intervener.
Background to the application
The plaintiff, Hansa Safety Services GmbH, commenced an in rem action against the defendant, who was the owner of the vessel King Darwin for the sum of EUR5,864. The plaintiff arrested the King Darwin on the same day. Thereafter, the vessel was released upon the defendant furnishing security to the plaintiff.
The defendant’s insolvency administrator (“Intervener”), appointed pursuant to insolvency proceedings commenced by the defendant in Germany, was granted leave to intervene in the Action and sought, inter alia, to set aside the warrant of arrest and claim damages from the plaintiff for wrongful arrest of the defendant’s vessel.
Whilst the Intervener’s claim for wrongful arrest was pending, the plaintiff filed and served its notice of discontinuance of the Action (“NOD”). In response, the Intervener applied, pursuant to Order 92 rule 4 of the Rules of Court, to strike out the same on the basis inter alia that the discontinuance would amount to an injustice and an abuse of process. The Senior Assistant Registrar granted the Intervener’s application and the plaintiff appealed.
The parties’ submissions
The key question to be determined by the court in the appeal was whether the facts of the case were such that the court’s inherent jurisdiction should be invoked to set aside the NOD which had otherwise been validly filed by the plaintiff.
The plaintiff contended that the question was to be answered in the negative given that the Intervener could, entirely independent of the Action, commence a separate claim for the tort of wrongful arrest against the plaintiff; it argued that no prejudice would be caused to the Intervener notwithstanding his pending claim.
The Intervener disagreed and contended that the discontinuance would cause him prejudice by preventing him from pursuing his claim for wrongful arrest “via the proper procedural route” within the arrest action itself and, further, that the discontinuance of the Action would deprive the Intervener of the advantages he had already gained in the litigation.
The court’s decision
A wrongful arrest claim may be pursued outside of an in rem action
The court found that the discontinuance of the in rem Action would not prohibit the Intervener from pursuing his wrongful arrest claim against the plaintiff since it was open to the Intervener to mount an independent claim for the tort of wrongful arrest.
However, the court recognised that, unlike a claim for wrongful arrest brought within an in rem action where the test is well established, the legal test applicable to the tort of wrongful arrest remains uncertain.
Deprivation of advantages in the litigation
The “uncertainty” of the applicable test for the tort of wrongful arrest was, however, found to be insufficient in and of itself to justify setting aside the NOD. Notwithstanding that, the court recognised that allowing the discontinuance of the Action would deprive the Intervener of certain advantages gained over the course of the Action including: (a) its successful application to intervene in the Action; (b) ready access and reference to the affidavits and Notes of Evidence pursuant to which the plaintiff had obtained the warrant of arrest; and (c) the right to claim damages for wrongful arrest within the Action, without having to commence a fresh suit and obtaining leave to serve a writ out of jurisdiction on the plaintiff, a Germany entity.
The court noted that deprivation of advantages is not a bar to discontinuance as the same may often be prevented by attaching appropriate terms to the discontinuance order. However, on the facts, the advantages gained by the Intervener could not easily be preserved with terms: should the action be discontinued, the Intervener would first have to obtain recognition of the German insolvency proceedings and thereafter commence fresh proceedings to pursue his claim for wrongful arrest, i.e. issue and serve a fresh writ out of jurisdiction and tender afresh the affidavits and Notes of Evidence to be relied on in its claim.
The aforesaid, alongside the uncertainty of the test applicable for the tort of wrongful arrest, meant it was unlikely that costs could adequately compensate the Intervener for the time and effort that he would have to expend in re-commencing an action for the wrongful arrest claim.
Accordingly, the court disallowed the discontinuance of the Action. So as not to compel the plaintiff to “litigate against [its] will”, leave was granted for the plaintiff to withdraw its claim in the Action (but not the Action itself) and without prejudice to the Intervener’s right to continue his wrongful arrest claim.
Key takeaways
This decision highlights the court’s willingness to intervene to prevent parties from being deprived of advantages achieved in the litigation. In exercising its inherent jurisdiction, the court is mindful to strike a balance between competing rights: it will not compel those seeking discontinuance to litigate against their will (insofar as no injustice is caused to the opposing party) and will consider alternative means, apart from disallowing discontinuance, to preserve a party’s rights such as by imposing appropriate terms including by ordering compensation by way of costs although the same was not deemed suitable on the facts.
Allen & Gledhill Partner Yap Yin Soon and Associate Dorcas Seah acted for the successful Intervener.