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Needs of justice trumps express rules: Writs in rem may now be extended beyond five times

24 November 2023

Introduction
 
Recently, the Federal Court in the case of Fimbank Plc v Pemilik Dan/Atau Pencarter Demis Kapal Atau Vesel ‘Nika’ Kini Dikenali Sebagai ‘Bao Lai’ [2023] 10 CLJ 165 held that the Court has inherent jurisdiction to allow the renewal of an admiralty writ in rem beyond the five-time limit prescribed under Order 6 rule 7(2) of the Rules of Court 2012 (“the Rules”).
 
Brief Facts
 
On 17 May 2019, Fimbank Plc (“Fimbank”) filed an admiralty writ in rem in the Kuala Lumpur High Court against the owners of the vessel “Nika” (“Vessel Owners”) on the ground that the Vessel Owners misdelivered the cargo to unauthorised third parties without presentation of the original bills of lading, thereby causing loss to Fimbank.
 
Fimbank was unable to physically serve the writ on the Vessel as she had not entered Malaysian territorial waters1 since the writ was issued. Between 15 November 2019 and 10 November 2021, Fimbank made five applications to renew the writ on the grounds that the Vessel had not been in Malaysian waters for service of the writ to be effected and all five applications were allowed by the High Court.
 
As Fimbank could not serve the Vessel as it had not entered Malaysian waters, Fimbank applied to renew the writ for the sixth time. The obstacle it faced was Order 6 rule 7(2) of the Rules which expressly stipulated that a writ in rem may only be extended five times by order of Court.2 
 
Fimbank urged the High Court to use its inherent powers under Order 92 rule 43 of the Rules to renew the writ for a sixth time.
 
The High Court & Court of Appeal Decisions
 
The High Court dismissed Fimbank’s application to renew the writ for the sixth time and the appeal to the Court of Appeal was also dismissed. The High Court and Court of Appeal inter alia relied on the express wording of Order 6 Rule 7(2) as limiting the number of times that a writ can be renewed and that the inherent powers of the Court can only be exercised where there is a lacuna in the Rules (no lacuna was found in the case of Order 6 rule 7(2) of the Rules which prescribed the maximum number of times an admiralty writ in rem can be renewed).
 
The Court of Appeal also went further to hold that Order 6 rule 7(2) of the Rules would be defeated if the Court were to continue to grant additional renewals of the writ.
 
The Federal Court Decision
 
On appeal to the Federal Court, the Federal Court answered the four questions of law posed to them as follows: 
  1. Whether Order 6 rule 7(2) of the Rules places an absolute cap and/or limit upon the number of times an admiralty writ in rem may be extended and/or renewed. 
Answer: No, Order 6 rule 7(2) of the Rules does not. 
  1. Whether Order 6 rule 7(2) of the Rules applies in circumstances where personal service of an admiralty writ in rem is an impossibility. 
Answer: No, Order 6 rule 7(2) of the Rules does not apply in such circumstances. 
  1. Whether Order 6 rule 7(2) of the Rules is intended to abrogate or defeat a claimant’s accrued statutory rights to prosecute its claim in rem and to security for its claim. 
Answer: No, that is not the intention of Order 6 rule 7(2) of the Rules. 
  1. Whether the language of Order 6 rule 7(2) of the Rules precludes the court from exercising its inherent jurisdiction to extend the validity of an admiralty writ in rem when the court is of the view that the justice of the case requires it. 
Answer: No. the language of Order 6 rule 7(2) of the Rules does not preclude the inherent jurisdiction/ powers of the court to extend validity of an admiralty writ in rem in order to prevent injustice.
 
The Federal Court’s grounds in summary are as follows: 
  1. Where the defendant vessel never comes into the jurisdiction, the five-time limit on the number of renewals of an admiralty writ simply does not apply. The purpose and object of Order 6 rule 7(2) of the Rules, which imposes a cap on the number of renewals of an admiralty writ, is to stop a plaintiff from sleeping on a writ without making any efforts to serve the same or indolent litigants who fail to take serious steps to serve a writ in rem on a defendant vessel that is within the jurisdiction. 

  2. Order 70 of the Rules4, which is the primary provision that governs admiralty causes and matters, would prevail in the event there is any conflicting provisions in the Rules in respect of an admiralty cause or matter. Since Order 70 rule 3(3) of the Rules envisages that an admiralty writ in rem cannot be served out of Malaysian territorial waters, if the Vessel does not enter the jurisdiction, the service of the writ simply cannot be effected and there is no opportunity for the plaintiff to make “efforts” to serve its writ in rem as required under Order 6 rule 7(2A) of the Rules as a condition for renewal.5 Therefore, Order 6 rule 7(2) of the Rules cannot be read to impose a five-time renewal limit on the writ. 

  3. An admiralty writ in rem ought to be contrasted from an ordinary civil writ which Order 6 rule 7(2) of the Rules prescribes a two-time renewal limit. This is because it is complemented by other provisions such as (i) substituted service under Order 62 rule 5; and (ii) service of writ out of jurisdiction under Order 11 of the Rules if the defendant is not within the Court’s jurisdiction. These provisions do not apply to an admiralty writ in rem which requires the writ to be served on the defendant vessel personally and when it enters Malaysian waters. 

  4. Order 6 rule 7(2) of the Rules being a subsidiary legislation cannot defeat a statutory right of action in rem that has been brought within the limitation period. Although the ownership of the Vessel had changed three times since the issuance of the writ, Fimbank’s statutory right of action in rem persists as it would otherwise result in manifest injustice. 

  5. The absence of lacuna in the Rules cannot of itself fetter the exercise of the Court’s inherent powers. In this case, there were no alternative remedies available to Fimbank. The ultimate discretion to decide whether to allow the renewal of a writ in rem in the interests of justice rests with the Court. 
Justice Nallini Pathmanathan who delivered the decision of the Federal Court observed that several other leading maritime jurisdictions, such as the United Kingdom, Hong Kong, Singapore and Australia, had dispensed with a cap or limit on the number of times the validity of an admiralty writ in rem can be extended. The Learned Judge suggested per obiter that the Rules Committee ought to consider amending Order 6 rule 7(2) of the Rules to remove the five-time limit on the number of renewals of an admiralty writ. Such an amendment, said Her Ladyship, would prevent unjust situations such as the one that arose in the instant appeal and also be in keeping with the laws of other major maritime jurisdictions.
 
As an admiralty writ in rem can only be served on a defendant vessel within the territorial jurisdiction of the court, the Court suggested that a harmonious reading of Order 6 Rule 7(2) and Order 70 of the Rules would mean that the court ought to allow the writ to be renewed so long as the defendant vessel does not enter the jurisdiction.
 
Conclusion
 
This decision is welcomed by shipping and maritime practitioners as it authoritatively determines that an admiralty writ in rem may be extended beyond the five-time limit prescribed in Order 6 rule 7(2) of the Rules if the plaintiff is able to satisfy the court that the defendant vessel did not enter Malaysian territorial waters prior to the application for renewal of the writ, thereby making service of the writ an impossible task.
 
This decision also supports the view that the Court has the inherent power to prevent manifest injustice notwithstanding the express words of the Rules.
 
While the Federal Court’s decision relates to the renewal of an admiralty writ in rem, it also opens the door for renewal of an ordinary civil writ beyond the two-time renewal limit prescribed in Order 6 rule 7 where justice of the case requires it. However, a plaintiff making such an application is likely face a higher burden as he/she would have to satisfy the Court why service could not be effected by way of substituted service or the rules relating to service out of jurisdiction.
 
Case Note by Siva Kumar Kanagasabai (Partner) and Teng Wei Hun (Senior Associate) of the Maritime and Shipping Practice of Skrine.
 
 
1 Order 70 rule 7(1) of the Rules of Court 2012 (“Rules”) provides that “…a writ which an action in rem is begun shall be served on the property against which the action is brought…” and Order 70 rule 3(3) of the Rules provide that a writ in rem is not permitted to be served out of jurisdiction.
2 Order 6 rule 7(2) of the Rules states: “Subject to paragraph (2A), where efforts to serve a writ on a defendant have been unsuccessful, the Court may by order extend the validity of the writ twice (in Sabah and Sarawak thrice and in admiralty actions five times), not exceeding six months at any one time, beginning with the day next following that on which it would otherwise expire, as may be specified in the order.”
3 Order 92 rule 4 of the Rules states: “For the removal of doubt it is hereby declared  that nothing in these Rules shall be deemed to limit or affect the inherent powers of the Court to make any orders as may be necessary to prevent injustice or prevent the abuse of the process of the Court.”
4 Order 70(1) of the Rules states: “This Order applies to Admiralty causes and matters, and the other provisions of these Rules apply to those causes and matters subject to the provisions of this Order.”
5 Order 6 rule 7(2A) of the Rules states: “An application for a renewal of writ must be made before the expiry of the writ, ex parte by notice of application supported by affidavit showing that efforts have been made to serve the defendant within one month from the date of the issue of the writ and that efforts have been made subsequent thereto to effect service.”

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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