The court affirmed that an in rem action can proceed against a vessel regardless of the owner's status, ensuring equitable treatment of claims pertaining to said vessel.

[1] This is an admiralty action in rem. The in rem writ was issued on 19 January 2017 against the Vessel to recover the losses suffered by the plaintiff arising from the failure of Perkapalan Dai Zhun Sdn Bhd to make payment for bunkers supplied, namely, marine fuel oil/marine gas oil to various vessels, including the vessel named "PDZ Mewah" ("the Vessel"). It is the plaintiff's case that the supply of bunkers was made at the request and order of Perkapalan Dai Zhun Sdn Bhd, who was the beneficial owner and/or who represented itself as the beneficial owner of the Vessel and five other vessels. On 24 January 2017, the Vessel was arrested by the plaintiff in Malaysian waters as security for its claim in this in rem action.

[2] This ground of judgment relates to the dismissal of the application filed by Perkapalan Dai Zhun Sdn Bhd to withdraw itself as a party to this in rem action on the basis that the creditors of Perkapalan Dai Zhun Sdn Bhd are no longer interested in the Vessel.

The Plaintiff's Pleaded Case

[3] It is the plaintiff's position that even though the 1st defendant, PDZ Holdings Berhad, appears to be the registered owner of the Vessel as of 6 December 2016, at all material times and at the time the in rem writ was issued, Perkapalan Dai Zhun Sdn Bhd remains the beneficial owner of the Vessel. It is the plaintiff's position that there are cogent evidence indicating that the transfer of the Vessel from Perkapalan Dai Zhun Sdn Bhd to the 1st defendant was a sham transfer of convenience motivated by mala fide intention and designed to prevent the plaintiff from rightful enforcement of its rights against Perkapalan Dai Zhun Sdn Bhd. As it was a sham transaction, the beneficial ownership in the Vessel was not divested from Perkapalan Dai Zhun Sdn Bhd to the 1st defendant.

[4] The grounds which form the basis of the plaintiff's allegations that the transfer of ownership is a sham transaction is stated in the plaintiff's pleadings and are reproduced below:

(a) the alleged transfer of ownership in the Vessel took place between two closely related companies, namely, Perkapalan Dai Zhun Sdn Bhd and PDZ Holdings Berhad (the 1st defendant);

(b) lack of evidence of intention or fact of payment from Perkapalan Dai Zhun Sdn Bhd to the 1st defendant. No cash was ever paid for the purchase of the Vessel by the 1st defendant as the alleged sale was "carried out" by way of offsetting debts owing from Perkapalan Dai Zhun Sdn Bhd to the 1st defendant based on the netbook value of the Vessel as at 31 October 2016 which was said to be RM4,625,898.71. The net book value of the Vessel does not represent the true market value of the Vessel;

(c) the alleged sale was an undervalue sale. According to a desktop valuation report commissioned by the plaintiff, the market value and scrap value of the Vessel as at 25 November 2016 (being the date when Perkapalan Dai Zhun Sdn Bhd allegedly entered into a settlement agreement with the 1st defendant to transfer ownership of the Vessel to the latter) were USD1,800,000.00 and USD1,574,000.00 respectively, which are equivalent to approximately RM7,890,404.40 and RM6,897,362.95 after currency conversion;

(d) the method and documentation used to effect the alleged transfer of title, delivery and payment are unclear; and

(e) the alleged transfer of ownership in the Vessel took place hurriedly, inconspicuously and within a short three weeks immediately after Perkapalan Dai Zhun Sdn Bhd signed the Payment Agreement with the plaintiff on 16 November 2016