FEDERAL COURT OF AUSTRALIA

US Shipping Limited v Leisure Freight & Import Pty Ltd (In Liquidation) (No 2)

[2015] FCA 413

THE COURT DECLARES THAT:

1.    The applicant is entitled to exercise a contractual lien over the vessel described as 1989 Sea Ray 400 Flybridge (WILFRE-19) (HIN:SERF1312K889) (“the Vessel”), and to sell the Vessel by public auction or private treaty.

2.    The applicant is entitled to appropriate from the proceeds of the sale of the Vessel outstanding freight and charges incurred with the applicant by the respondents in the sum of $71,036.04, as detailed in the following table and deposed to in the affidavit of Glenn William O’Brien sworn 21 April 2015.

THE COURTS ORDERS THAT:

3.    Pursuant to s 471B of the Corporations Act 2001 (Cth), the applicant have leave to proceed with the application against the first respondent.

4.    The application is otherwise adjourned to a date to be fixed.

5.    The costs of and incidental to the application are reserved.

THE COURT DIRECTS THAT:

6.    Within 14 days of the settlement of the sale of the Vessel, the applicant is to:

(a)    file an affidavit deposing to the outcome of the sale of the Vessel and the proceeds received; and

(b)    pay into Court the surplus funds, if any, realised from the sale of the Vessel, after the applicant has deducted amounts in accordance with para 2 of these orders and any costs of selling the Vessel; and

(c)    file any application and affidavit material upon which it intends to rely in respect of any claim it may have to all or part of any surplus funds, and

(d)    file any application and affidavit material upon which it intends to rely in respect of costs.

7.    Pursuant to r 1.32 and r 1.36 of the Federal Court Rules 2011, these orders and the reasons for judgment in support of these orders are made and published from Chambers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 16 April 2015, the Court published judgment in this matter and made orders that the proceeding be adjourned to enable further steps to occur. The Court directed the applicant to submit proposed orders and declarations to be made in accordance with the reasons for judgment.

2    The costs of the proceedings were reserved for further determination.

3    On 23 April 2015, the applicant filed the affidavit of Mr Glenn O’Brien sworn 21 April 2015. Mr O’Brien is a solicitor with the conduct of the matter on behalf of the applicant. Annexure GWO-1 to Mr O’Brien’s affidavit is the proposed orders the applicant seeks in the proceeding arising out of the judgment. The content of these orders is, of course, informed by the judgment and the material filed in the proceedings referred to in the judgment. Mr O’Brien annexes as GWO-2 to his affidavit, a copy of Mr Michael Holden’s affidavit of 21 March 2014 sworn on behalf of the applicant in support of the calculation of various items of freight, cranage, GST and Customs fees and duties, Rivergate storage fees, transfer (Skipryan), costs, loadmaster costs, towage costs, Port of Brisbane charges and demurrage. The total amount of these items is $183,036.04. The copy of Mr Holden’s affidavit annexed to Mr O’Brien’s affidavit as GWO-2 does not include all of the exhibits to Mr Holden’s affidavit and thus I have had regard to the original of that affidavit with all of its exhibits.

4    Subject to the following observations, I am satisfied that the proposed orders ought to be made and are consistent with the reasons for judgment. The matter that requires some attention is the claim by US Shipping Limited for demurrage of $112,000.00. These reasons are to be read together with the reasons for judgment in support of the orders made on 16 April 2015 and in these reasons I will continue to use the abbreviated terms adopted in the principal judgment: US Shipping Limited v Leisure Freight & Import Pty Ltd (In Liquidation) [2015] FCA 347.

5    In Mr Holden’s affidavit, very little is said about demurrage. The evidence is confined to this observation at para 35 of Mr Holden’s affidavit:

Demurrage

35.    In light of the First Respondent’s [Leisure Freight & Import Pty Ltd (In Liquidation)] failure to pay the outstanding freight, the cargo was not discharged as agreed and the Applicant [US Shipping] has incurred demurrage of US$8,000 per day for 14 days, totalling $112,000.

6    The Booking Note between US Shipping and Leisure describes the loading port as Wilmington, West Palm Beach. The discharging ports are described as Brisbane and Newcastle. The Carrier, of course, is US Shipping and the Merchant is Leisure. The term “Merchant” includes the shipper, holder, consignee, receiver of the goods, any person owning or entitled to possession of the goods or of the Bill of Lading and anyone acting on behalf of any such person.

7    Item 11 of the Booking Note provides for a demurrage rate (if agreed) of US$8,000.00 per day: hence the rate was agreed at US$8,000.00 per day. The nomination of the rate does not determine the legal obligation to pay demurrage. Item 13 of the Booking Note says: “Ships demurrage will be incurred if boats are delivered late at the load port”. Thus, it follows that in terms of the contract as between Leisure and US Shipping, an obligation on the part of Leisure will arise to pay something called “demurrage” if the cargo (that is, the boats) is delivered late at the nominated load port (Wilmington). Clause 12 of the Terms and Conditions (see [11] of the principal judgment) provides that the carrier shall have a lien on the goods and any documents relating to them for all sums payable to the carrier under the contract and for the cost of recovering such amount. Clause 12 also provides that for the purpose of recovering such amount, the carrier shall have the right to sell the goods by public auction or private treaty without notice to Leisure.

8    In this case, US Shipping says that an amount by way of demurrage is payable under the contract to it by Leisure calculated in accordance with Item 11 and that that amount is the subject of the lien. Mr Holden says that because Leisure failed to pay the outstanding freight due to US Shipping, the cargo was not discharged as agreed with the result that 14 days of demurrage accrued at US$8,000.00 per day resulting in the claim for demurrage of $112,000.00.

9    The first observation to be made about that claim is that it is not said to arise out of delays “at the load port” consistent with Item 13 of the Booking Note. The claim for demurrage is more in the nature of a claim for loss suffered by reason of 14 days delay at the discharge port. That claim does not arise under the terms of the Booking Note properly construed. However, US Shipping may well be entitled to a claim for the properly assessed money value of the damage it has suffered by reason of delay at the discharge port. How is the measure of that delay loss or damage to be calculated? Since the parties have agreed that demurrage due to delay at the load port has a daily rate of US$8,000.00, a sensible analogue of the value of the delay at the discharge port might well be US$8,000.00 per day. The parties seem to have attributed that quantum to daily delay at loading and thus it seems reasonable on one view to treat that amount as the measure of delay at the discharge port. However, the agreed rate is a function of the terms and conditions overall and is an agreed contractual measure according to the terms of the document. If US Shipping seeks to recover demurrage by reason of delay at the discharge port, it must properly establish the measure of that delay as the contract does not fix the rate in the circumstances of the conduct in question.

10    The other difficulty is that attributing the claim to “demurrage” is a little misconceived as demurrage is properly regarded as a sum named in a charter-party to be paid by the charterer as liquidated damages for delay beyond what is conventionally regarded as the lay days. The terms and conditions of the Booking Note as construed, having regard to the matters recited at the foot of the Booking Note and the Bill of Lading (as to which see the principal judgment), are concerned with the reservation of a particular number of square metres of unobstructed deck space for a cargo of yachts according to the manifest for carriage on the Vessel Alderney, not a charter-party agreement.

11    I am not satisfied that the evidence properly demonstrates a right to demurrage under the contract and I am not satisfied that the claim for damage by way of time delay at the discharge port is properly measured by US$8,000.00 per day for 14 days. Thus, I am not satisfied that the applicant in the very attenuated evidence put on about this question has made out, on the balance of probabilities, a claim for demurrage of $112,000.00. Accordingly, the measure of the claim is not $183,036.04 but rather $71,036.04.

12    Accordingly, the orders will be those orders proposed by the applicant subject to a reduction in “TOTAL CHARGES” of $112,000.00.

Associate:

Dated:    4 May 2015