Facts

The recent high court decision in Straits Bunkering Pte Ltd v Ketua Pengarah Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Johor concerned an application with regard to the vessel MT Abbas, which had been arrested by the Southern Region Marine Department pursuant to Sections 491B(1)(k) and 491C of the Merchant Shipping Ordinance 1952 (MSO 1952).(1) Sections 491B(1)(k) and 491C of the MSO 1952 provide as follows:

491B. Notification to the Director of Marine of activity engaged by a ship

(1) Any ship which is engaged or intends to engage in any of the following activities:

(k) ship-to-ship activity...

in Malaysian waters shall be required to notify the Director of Marine, in such form as may be prescribed by him, of such activity.

491C. Power of the Director of Marine

(1) The Director of Marine may, where he has reason to believe that an offence has been committed under this Part...

(c) detain such ship including any equipment, gear, appurtenance, cargo or thing belonging to or on board that ship.

Based on the preliminary examination that officers of the second respondent (ie, the Johor Ministry of Domestic Trade and Consumer Affairs) conducted, it was discovered that the tanks marked 4S and 4P on the MT Abbas contained diesel. Investigations therefore proceeded under Section 20(1) of the Control of Supplies Act (CSA) 1961 which states that:

20. Removal of controlled articles from business premises and storage of controlled articles in premises other than premises specified in the licence, and dealing in controlled articles otherwise than in normal course of business

(1) Any person who removes any controlled article or causes or permits any controlled article to be removed from any premises specified in the licence or stores any controlled article or causes or permits any controlled article to be stored in any premises, other than premises specified in the licence or premises approved by the Controller for such storage, shall be guilty of an offence against this Act.

The officers confiscated the diesel and issued tenders for its sale under Sections 11 to 12 of the CSA, which provide as follows:

11. Power of Controller to take possession of controlled articles, vehicles, vessels and other articles

(1) If the Controller or supplies officer has reason to believe that any person is committing an offence against this Act, he may take possession in such manner as he shall deem fit of any controlled article in respect of which he has reason to believe such an offence has been committed or of any vehicle, vessel or other article by means of which any such offence has been committed or which he has reason to believe is intended to be used for the commission of that offence...

12. Action after taking of possession

(1) Where, under section 11, possession has been taken of any controlled article, then—

(a) if it is decided to institute criminal proceedings against any person in respect of an offence against this Act involving the controlled article, the Controller may—

(i) retain the controlled article until the conclusion of those criminal proceedings and, except where the court orders confiscation thereof under section 26, shall dispose thereof in such manner as the court may order; or

(ii) order that the controlled article be sold in such manner as will secure a reasonable price for it in the circumstances, and the proceeds of sale shall be kept until the conclusion of those criminal proceedings and, except where the court orders confiscation thereof under section 26, shall be disposed of in such manner as the court may order.

The applicant contended that:

• the respondents had no jurisdiction over the matter as they claimed that the confiscated diesel had been purchased from Singapore and therefore did not come under the CSA's purview;
• since no criminal proceedings had been instituted against the vessel, the officers of the second respondent (the Johor Ministry of Domestic Trade and Consumer Affairs) should have returned the diesel to its owner pursuant to Section 12(2)(b) of the CSA:
  
  

12. Action after taking of possession

(2) Where, under section 11, possession has been taken of any vehicle, vessel or thing other than a controlled article, then...

(b) if it is otherwise decided, the Controller shall restore possession to the owner.

Conversely, the respondents argued that:

• the applicant was not the registered owner of the vessel and thus had no locus standi to file the application; and
• the claim that the applicant was the MT Abbas's beneficial owner had not been proven.
  
  

Decision

The court examined whether:

• the respondents had jurisdiction over the controlled article (ie, the diesel which the second respondent had confiscated);
• the applicant was the owner of the MT Abbas;
• the applicant was the operator of the vessel; and
• the respondents had acted in bad faith.
  
  

Having considered the evidence and submissions, the court found as follows:

• Based on the CSA, the applicant's argument that the respondent had no jurisdiction over the matter was untenable. The CSA prohibits hoarding and refusal to sell controlled articles. The court was not persuaded that the diesel in question did not fall within the definition of a 'controlled article' under the CSA.
• Based on the MSO, registration was the cornerstone and pivotal in asserting ownership of a vessel. This was sufficient to dismiss the application on the basis that the applicant had no locus standi.
• Since the MT Abbas was registered in the name of Sirus Marine, that amounted to prima facie evidence that the registered and beneficial owner was in fact Sirus Marine. The onus was on the applicant to rebut the above presumption. Based on the oral and documentary evidence presented, there was no indication that the applicant had taken steps to transfer the vessel based on the MSO's statutory requirements. It was further found that the bill of sale was between Sirus Marine and Straits Bunkering Sdn Bhd, which was a separate entity. Therefore, the applicant had not discharged the burden of proving that it was the beneficial owner of the MT Abbas.
• Because the applicant had no evidence, their case was unsubstantiated and spurious. The applicant had thus failed to discharge the burden of proving bad faith on the part of the respondents.
  
  

For further information on this topic please contact Rajasingam Gothandapani at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.

Endnotes

(1) Straits Bunkering Pte Ltd v Ketua Pengarah Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Johor [2020] 8 MLJ 450 (High Court of Malaya at Johor Bahru, Evrol Mariette Peters JC).