FEDERAL COURT OF AUSTRALIA
Admiralty - Sale pendente lite - principles - Marshal’s costs and expenses - enforcement of undertaking.
Admiralty Act 1988 (Cth)
Admiralty Rules Rule 69(5) form 27
Marinis Ship Suppliers Pty Limited v The Ship “Ionian Mariner” (1995) 59 FCR 245 - app
“The Myrto” [1977] 2 Lloyds Reports 243 - ref to
BAYSIDE AIR CONDITIONING PTY LTD v THE OWNERS OF THE SHIP “CAPE DON”
No QG 27 of 1997
Cooper J
Brisbane
15 May 1997
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
QG 27 of 1997
BETWEEN:
BAYSIDE AIR CONDITIONING PTY LTD
Plaintiff
AND:
THE OWNERS OF THE SHIP “CAPE DON”
Defendant
JUDGE MAKING ORDER: Cooper J
WHERE MADE: Brisbane
DATE OF ORDER: 15 May 1997
MINUTES OF ORDER
ORDER FOR VALUATION AND SALE OF SHIP
Ship: The Cape Don
To the Marshal:
1. Have the above ship valued in writing;
2. Sell the above ship under the Admiralty Rules;
3. Appoint Austral Chartering Pty Ltd to provide a Certificate of Valuation and to act as the broker for sale;
4. The sale need not be by Public Auction, and the sale may be conducted by closed tender;
5. Advertising of the sale be at the Marshal’s discretion;
6. There be liberty to all parties to apply for further directions or orders as to the valuation and sale of the above ship;
7. The costs of the plaintiff and the defendant of and incidental to the application for valuation and sale of the above ship be each party’s costs in the proceedings;
8. The Marshal’s costs of and incidental to the application be the Marshal’s costs of the sale and be paid out of the sale proceeds on a solicitor and own client basis.
On the Marshal’s notice of motion the court orders :-
1. The respondent firm, Bain Gasteen, solicitors, pay the sum of $7,600 to the Marshal monthly in advance for the cost of maintenance of the vessel “Cape Don” the first of such payments to be made on 9 June 1997 and thereafter until sale of the vessel in accordance with the orders made today;
2. The Marshal be paid:
(i) at the rate prescribed for the Marshal of the Supreme Court of Queensland in respect of the items itemised in paragraph 9 of the affidavit of Frederick John Gillis filed 8 May 1997;
(ii) salary at the rate prescribed by the Federal Court Rules Regulation 2, Schedule item 6.
3. The costs of the Marshal of and incidental to the notice of motion be the Marshal’s costs of the arrest and maintenance of the vessel and be paid as such on a solicitor and own client basis.
4. The plaintiff’s costs with respect to the Marshal’s notice of motion be reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
QG 27 of 1997
BETWEEN:
BAYSIDE AIR CONDITIONING PTY LTD
Plaintiff
AND:
THE OWNERS OF THE SHIP “CAPE DON”
Defendant
CORAM: Cooper J
PLACE: Brisbane
DATE: 15 May 1997
REASONS FOR JUDGMENT
The Court has before it an application on the part of the plaintiff for an order for appraisement and sale pendente lite of the vessel, “Cape Don”. Such application is made pursuant to Admiralty Rule 69(5). The jurisdiction to make an order in these circumstances is not in doubt and the relevant principles are contained in the judgment of Ryan J in Marinis Ship Suppliers Pty Limited v The Ship “Ionian Mariner” (1995) 59 FCR 245. In particular, Ryan J repeats and relies upon the observations of Brandon J in the “The Myrto” [1977] 2 Lloyds Reports 243 at 260 where his Lordship notes that a sale of a ship pendente lite should not be made except for good reason and this is whether or not the action is defended.
The court also has before it the Marshal’s notice of motion to enforce payment of his present costs and expenses of maintaining the vessel under arrest.
On the application for appraisement and sale, the defendant owner of the vessel, Martaban Limited (“Martaban”), opposes the making of the orders sought. The basis of the opposition is that the material discloses that Martaban has been thwarted in its attempt to sell the vessel by the conduct of the plaintiff and others in relation to a break-down of commercial arrangements between them. Martaban wishes to sell the vessel itself and believes that it can achieve a better price for the vessel than sale by the court pendente lite.
The claim by the plaintiff in the action is disputed by Martaban. It alleges that the monies due or claimed to be due by the plaintiff are, in fact, owing by a joint-venture partnership or were to be paid out of profits to be made by that partnership but were not costs and expenses incurred by Martaban for the benefit of the vessel. It was submitted that the vessel should not be sold where the claim is disputed as in the present case. Today is not the occasion to determine where the merits of the substantive claim lie. On the material it is clear that a substantial claim has been sworn to by the plaintiff for work that was done in relation to the air conditioning and refrigeration on the vessel. The question in issue on the substantive hearing is who is liable, in the circumstances, to pay for that work. That is a matter to await the trial of the action.
The defendant owner, by its counsel, concedes that there are on-going attempts to sell the vessel and that it is not the present intention of the owner to seek to operate the vessel. It is submitted by the owner that, although there have been no steps taken to attempt to set aside the arrest of the vessel, a claim for wrongful arrest where the vessel has been sold pendente lite by the court would not be an adequate remedy because damages awarded in any such action would be inadequate to compensate the defendant. As presently advised, I have some difficulty in seeing that it would not be possible to establish the difference between any sale price achieved on an appraisement and sale pendente lite and any other contract price, the benefit of which Martaban has lost by the arrest of the vessel.
It is clear on all of the evidence that the vessel is deteriorating. It is held at Yamba under a detention order issued by AMSA. It is also subject to directions from the Office of Marine Administration of New South Wales which would require that substantial sums of money be spent to bring the vessel up to a state where it can be moved from the port. On the material before me the ongoing cost to the Marshal to maintain the vessel amounts to approximately $7,500 per month.
To date, the plaintiff has paid approximately $40,000 to the Marshal on account of costs and expenses associated with the arrest of the vessel and its upkeep and maintenance. The owner has supplied no part of the costs of maintaining the vessel at Yamba. Nor has the owner sought to put forward a bail bond or other security in lieu of the vessel to procure its release from arrest. The reason that none of these courses has been taken by the owner is stated in the material filed on its behalf to be that the arrest was wrongful in the first place.
Overall, I am satisfied that the interests of creditors generally, of the owner, and of the claimant against the vessel, are best served by ordering appraisement and sale of the vessel pendente lite so that the funds generated from such a sale may be paid into court for the benefit of all parties interested in them.
Having heard the parties on the terms of the orders to be made, I make the following orders following Form 27 of the Admiralty Rules.
The court orders the Marshal to :-
1. Have the ship, “Cape Don”, valued in writing;
2. Sell the above ship under the Admiralty Rules;
3. Appoint Austral Chartering Pty Ltd to provide a certificate of valuation and to act as the broker for sale;
The court further orders :-
4. the sale need not be by public auction, and may be conducted by closed tender;
5. advertising of the sale be at the Marshal’s discretion;
6. there be liberty to all parties to apply for further directions or orders as to the appraisement and sale of the said vessel.
The court orders the costs of the plaintiff and of the defendant of and incidental to the application for appraisement and sale be each party’s costs in the proceedings.
As to the position of the Marshal’s costs, I think the appropriate order is that those costs be the Marshal’s costs of sale and be paid out of the proceeds of sale. As the Marshal in these proceedings acts as an officer of the court and not as a party to the proceedings the Marshal should be fully indemnified for the costs he has incurred in discharging his duty. Accordingly, the court orders the costs of the Marshal of and incidental to today’s application be paid on a solicitor and own client basis.
There is no opposition to the substantive orders sought on the Marshal’s notice of motion.
On the Marshal’s notice of motion the court orders :-
1. The respondent firm, Bain Gasteen, solicitors, pay the sum of $7,600 to the Marshal monthly in advance for the cost of maintenance of the vessel “Cape Don” the first of such payments to be made on 9 June 1997 and thereafter until sale of the vessel in accordance with the orders made today;
2. The Marshal be paid:
(i) at the rate prescribed for the Marshal of the Supreme Court of Queensland in respect of the items itemised in paragraph 9 of the affidavit of Frederick John Gillis filed 8 May 1997;
(ii) salary at the rate prescribed by the Federal Court Rules Regulation 2, Schedule item 6.
There remains the question of costs on the notice of motion. I am satisfied in this case that the institution of the notice of motion was necessary. The Marshal sought by the notice of motion to recover monies that were properly payable under the undertaking to pay on demand the Marshal’s costs and expenses of arrest and maintaining the vessel. On the material there had been default of payment when demand was made by the Marshal.
It was submitted by the respondent to the notice of motion that the Marshal was not obliged to comply with the directions given by the Office of Marine Administration of New South Wales and therefore the notice of motion to the extent it sought to deal with those costs was unnecessary. Whether or not the directions given by the Office of Marine Administration of New South Wales were valid is unnecessary to determine because on the material it is unlikely that those directions will be pursued. However, the fact that relief was sought in relation to recovering payment of the costs of compliance in the event that the Marshal was obliged to make such payments does not, in my view, operate to deprive the Marshal of his entitlement to the costs of bringing the notice of motion. Therefore the court orders that the Marshal’s costs of and incidental to the notice of motion be the Marshal’s costs of the arrest and maintenance of the vessel and be paid as such. It seems to me that for the reasons that I have previously expressed those costs ought to be paid on a solicitor and own client basis.
I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.
Date: 15 May 1997
Associate
Counsel for the plaintiff: M A Wilson QC with her T W Quinn
Solicitors for the plaintiff: Bain Gasteen
Counsel for Martaban Ltd: J R Webb
Solicitors for Martaban Ltd:King & Company
Counsel for the Marshal: A I Philippides
Solicitor for the Marshal: Australian Government Solicitor
Date of Hearing: 15 May 1997
Place of Hearing: Brisbane
Date of Judgment: 15 May 1997
