FEDERAL COURT OF AUSTRALIA
ADMIRALTY - proceeding in rem against ship - application by shipowner for release of ship from arrest - whether owner must first file an appearance where owner not served with initiating process but wishes to challenge validity of arrest on ground of lack of jurisdiction.
Admiralty Rules, 6(1), 15, 23(1), 52(1)
Federal Court Rules O 9 rr 2(1), 6, 7
Trade Practices Commission v The Gillette Company (No 1) (1993) 45 FCR 366
Caltex Oil (Australia) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529
J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575
The Gemma [1899] P 285
KMP Coastal Oil Pte Ltd v The Owner of Motor Vessel “Iran Amanat” (unreported, FCA, 20/12/96)
WAITEMATA STEVEDORING SERVICES LIMITED v THE SHIP MV “RANGITATA” & ANOR
NG 115 of 1998
LINDGREN J
SYDNEY
7 APRIL 1998
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IN THE FEDERAL COURT OF AUSTRALIA |
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BETWEEN: |
Waitemata Stevedoring Services Limited PLAINTIFF
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AND: |
First DEFENDANT
Ecomar-Schiffarts GmbH Co KG Second DEFENDANT
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
(ex tempore)
(necessity for party applying for release of ship from arrest to file appearance)
INTRODUCTION
Admiralty Rule 52(1) provides:
“A party to a proceeding may apply to the court in accordance with Form 19 for the release of a ship or other property that is under arrest in the proceeding.”
The second defendant (“Ecomar”) wishes to file an application in the form of Admiralty Form 19 for release of the ship “Rangitata” from arrest. Ecomar claims to be the owner of the ship. It appears that the plaintiff, a stevedore, also thought Ecomar was the owner of the ship, since it named Ecomar as second defendant, on the basis that it was a “relevant person”: see Admiralty Rule 15.
The master and crew filed a caveat on 25 February 1998 claiming a maritime lien pursuant to section 4(3)(t)(i) and (ii) of the Admiralty Act 1988 (Cth). They and the plaintiff submit that Ecomar lacks standing to apply for the release because it is not a “party to the proceeding”. Their first submission is that, on the evidence, it is not clear that Ecomar is the owner of the ship. This submission depends on a result of a search of Lloyds Register of Ships which is in evidence, and which shows the owner as “m.s. ‘Rangitata’ Ecomar - Schiffarts GmbH Co KG”. I accept Ecomar’s submission that the omission of the prefix “m.s. ‘Rangitata’” in the heading to the proceeding is an obvious misnomer capable of correction: see Admiralty Rule 6 (1); Federal Court Rules O 13 r 2; Bridge Shipping Pty Limited v Grant Shipping SA (1991) 173 CLR 231.
I proceed now to more substantial issues. The proceeding is one in rem, that is, against the thing, in this case the ship. Admiralty Rule 18 provides that a proceeding commenced as an action in personam shall not be commenced by the same initiating process as that by which a proceeding is commenced as an action in rem. The originating process, the writ, has never been served on Ecomar. The substantial question before me is whether, in these circumstances, Ecomar is entitled, without first filing an appearance, to apply to the Court for the release of the ship pursuant to Admiralty Rule 52(1) on the basis that the Court lacked jurisdiction to issue the writ. Ecomar wishes not to file an appearance, apparently on the basis that such a filing would, notwithstanding Admiralty Rule 18, give the proceeding the additional character of a proceeding in personam against Ecomar.
Ecomar supports a positive answer, while the plaintiff and the master and crew support a negative one, to the question to which I have referred.
1. Is Ecomar a “party to the proceeding” within Admiralty Rule 52(1)?
The plaintiff and the master and crew submit that, not having been served, Ecomar is not yet a “party to the proceeding”. I disagree.
The expression “party to the proceeding” is not defined in the Admiralty Act 1988 (Cth) or the Admiralty Rules, but there are many indications that, having been named as a defendant, Ecomar is already a party to the proceeding. Part III of the Admiralty Rules is headed “PARTIES”. The first Rule in that Part, r 15, is as follows:
“15(1)Initiating process in a proceeding commenced as an action in rem shall specify a relevant person in relation to the maritime claim concerned as a defendant.
(2) A relevant person may be specified by reference to ownership of, or other relevant relationship with, the ship or other property concerned.”
Of course, the word “defendant” identifies a well known class of party.
Rule 17(1)(a) is as follows:
“17(1) The powers of a court in relation to amendment of process and joinder of parties extend to making an order, on such terms as are just:
(a) substituting for a defendant identified in accordance with subrule 15(2) another person...”.
This provision assumes that a person specified as “defendant” under r 15 (2) is necessarily a party and that a person substituted for that person is also a party, any question of the service of process or of the filing of an appearance being irrelevant to the identity of a “party”.
Admiralty Rule 22 (1) also makes it clear that for the purpose of the Admiralty Rules a person is appropriately called a “party” before filing an appearance, since that provision is to the effect that, in a proceeding commenced as an action in rem, the plaintiff shall, unless the court otherwise orders, file and serve a statement of claim on each “party” who has entered an appearance. The assumption is that a defendant is a party prior to, but capable of, filing an appearance.
Similarly, Admiralty Rule 23 (1) makes it clear that for the purpose of the Admiralty Rules a person can be a party before service. That provision, to which I shall have occasion to return, is as follows:
“23(1)In a proceeding commenced as an action in rem, the time within which an appearance by a party to the proceeding shall be filed is 21 days after service of the initiating process on the party.”
Again, the provision assumes that it is appropriate to refer to a person named as a defendant as a “party” prior to service of the initiating process.
It has been said in a different context and for a different purpose, that “ ... the word ‘party’ must be given the meaning which lawyers ordinarily attach to it when speaking of litigious proceedings in a Court of Record, namely, ‘party to the record’” (The King v Murray and Cormie; ex parte The Commonwealth (1916) 22 CLR 437 at 469 per Gavan Duffy and Rich JJ). I do not think that the special nature of the present proceeding as one in rem, or the fact that Admiralty Rule 15 requires the owner of the ship to be specified as a defendant in an action in rem against the ship, or the prohibition against commencing an action in personam against the ship owner by the same initiating process as that by which an action in rem is commenced against the ship, whether taken singly or together, have the effect of displacing that meaning.
In my opinion, Ecomar is a “party to the proceeding” for the purposes of Admiralty Rule 52 (1), and therefore has standing to apply under that provision.
2. Must Ecomar file an appearance before filing an application for release under Admiralty Rule 52(1)?
I think that the answer to this question is that it must. In my view, this result is established by Admiralty Rules 6(1), 23(1) and O 9 r 2(1) of the Federal Court Rules which are as follows:
Admiralty Rules
“6(1) These Rules are not intended to exclude or limit the operation of Rules of Court of a court exercising jurisdiction under the Act to the extent that those Rules are not inconsistent with these Rules.”
Admiralty Rule 23 (1) was set out earlier.
Federal Court Rules
“O 9 r 2(1) Subject to these Rules a respondent shall enter an appearance before the date appointed for a directions hearing and before filing any document.”
The requirement of FCR O 9 r 2 (1), that a respondent shall enter an appearance before, relevantly, filing any document, is “not inconsistent with” the Admiralty Rules, and, in particular, is not inconsistent with Admiralty Rule 23 (1) set out earlier. Admiralty Rule 23 (1) provides, in effect, that where a party served intends to appear, the time for the filing of the appearance is twenty-one days after service. Order 9 r 2 (1) applies where there is a date fixed for a directions hearing or where a defendant wishes to file a document. The three requirements are simply independent of each other and cumulative: each operates according to its own terms.
Two chief arguments are advanced by Ecomar against the result indicated. The first is based on the fact that notwithstanding Federal Court Rule O 9 r 2 (1), it is established that an appearance need not be filed before a respondent challenges the Court's jurisdiction. Ecomar refers, in particular, to Trade Practices Commission v The Gillette Company (No 1) (1993) 45 FCR 366 (“Gillette”). Burchett J there held that a foreign respondent was entitled, without first filing an appearance, to file a notice of motion seeking discharge of an order giving leave to serve the initiating process outside Australia, an order setting aside service of it, and a declaration that the process had not been duly served. But, in my view, Gillette is distinguishable from the present case on two grounds. First, the decision is founded on O 9 r 7 of the Federal Court Rules which provides as follows:
“7(1) The Court may, on application made by a respondent to any originating process on notice of motion filed within the time fixed by sub-rule (2), by order -
(a) set aside the originating process;
(b) set aside the service of the originating process on the respondent;
(c) declare that the originating process has not been duly served on the respondent;
(d) discharge any order giving leave to serve the originating process outside Australia or confirming service of the originating process outside Australia.
(2) Notice of a motion under sub-rule (1) may be filed by a respondent before he enters an appearance or within fourteen days after the date of entry of a conditional appearance by him.” (emphasis supplied)
It can be seen that the orders sought in the motion mirrored pars (b), (c) and (d) of O 9 r 7 (1).
Second, the motion in Gillette sought nothing more than to challenge the validity, on jurisdictional grounds, of the attempt to make the respondent subject to the Court's jurisdiction. Here, by contrast, Ecomar wishes to file an application under Admiralty Rule 52(1) seeking an order having positive effect, that is, an order that a ship be released from arrest.
Gillette does not govern the present case, and in the absence of authority binding me to do so, I would not create an exception to FCR O 9 r 2 (1) in the circumstances of the present case by analogy with that case.
The second ground on which Ecomar relies is that the filing of an appearance will have the effect of converting in rem proceedings into proceedings which are also in personam as against Ecomar. Ecomar refers to Caltex Oil (Australia) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529 at 538, and the cases referred to there and in Cremean's Admiralty Jurisdiction Law and Practice in Australia (1997) at p 114. Ecomar submits that it should not be required, as the price of challenging the Court’s jurisdiction to issue the warrant of arrest of its ship, to submit to the Court’s in personam jurisdiction.
I see the force of this submission. It seems sufficient to dispose of it, however, to say that I do not think that it prevails over the provisions of the Rules to which I have previously referred.
This puts a foreign defendant to a proceeding in rem who has not been served, whose ship has been arrested, and who wishes to challenge the Court’s jurisdiction, at a disadvantage when compared with a foreign defendant to a proceeding in personam who wishes to make the same challenge. But the following observations may be made.
First, as noted above, the shipowner is seeking, not merely to deny jurisdiction but positive relief directed to overcoming a previous purported exercise of jurisdiction.
Second, in cases dealing with arrest it appears to have been accepted that a plaintiff may, in effect, force a shipowner to file an appearance by arresting his or her ship. Thus, in J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575 at 584-5, Samuels JA said:
“The English theory and practice regards proceedings in rem as merely a device to obtain personal jurisdiction over the shipowner, and security out of which any judgment may be satisfied .... It was only if no appearance was entered that the action remained ‘as it began, an action in rem only, operating only against the ship arrested’; per Lord Denning MR in The Banco [1971] P 137, at p 151.”
Similarly, in The Gemma [1899] P 285 at 291, A L Smith LJ said:
“For what purpose does a party appear to an action in rem? There are, ... three reasons for the appearance: first, to release the ship, so that it may go on trading for the owner; secondly, to contest the plaintiffs’ allegations that the ship had been in default; and, thirdly, in order to prevent its being sold.”
This passage was quoted by Tamberlin J in KMP Coastal Oil Pte Ltd v The Owner of Motor Vessel “Iran Amanat” (unreported, FCA, 20/12/96), where his Honour said (at 13):
“In the present case, the reason and basis for the appearance was obvious, namely, to dispute the jurisdiction of the Court and obtain the release of the vessel.”
His Honour also held that the making of an application for release was not an admission that the arrest itself had been lawful.
Third, where the shipowner files an appearance, it is not necessarily without protection, as it will be entitled to recover from the plaintiffs, as damages, the amount of any loss or damage suffered by reason of the arrest where the arrest was obtained unreasonably and without good cause: Admiralty Act 1988 s 34.
Fourth, it has been suggested that a shipowner may find it to its advantage not to file an appearance, on the basis that once the ship has been sold and the plaintiff has received the proceeds, no action will lie against the shipowner in personam in respect of the same cause of action, even where the amount recovered by the plaintiff out of the proceeds of sale is less than the amount claimed: see Davies and Hickey, Shipping Law (1990), p 88.
I conclude by noting an issue which has not been explored in argument. It seems to be accepted that Ecomar can file a conditional appearance under Federal Court Rules O 9 r 6 (1); see Admiralty Rule 6 (1) and Cremean, op cit, at p. 114. Order 9 r 6 is as follows:
“6(1) A respondent may enter a conditional appearance.
(2) A conditional appearance shall have effect for all purposes as an unconditional appearance, unless the Court otherwise orders or the respondent applies under and in accordance with rule 7 and the Court makes an order under that rule.”
Rule 7 of Order 9 was set out earlier. It has not been explored before me whether a conditional appearance by Ecomar would satisfy Admiralty Rule 52 (1), or whether an order could be made under FCR O 9 r 6 (2) which would have the effect of protecting Ecomar from a general submission to the in personam jurisdiction of the Court. As I said at the outset, what Ecomar seeks to do is nothing less than to file an application under Rule 52 (1) in the form of Admiralty Form 19, without first filing any appearance at all. I decline to permit it to do so.
It may be noted in passing that in The United States of America, a shipowner is entitled to “make a ‘restricted appearance’ that enables the owner to make motions and defend on the merits, with no more at stake than losing the ship”: Benedict on Admiralty (7th Edition), Volume 5 - “Maritime Arrest”, §29, referring to 28 U S Code, Appendix - Federal Rules of Civil Procedure - Supplemental Rules for Certain Admiralty and Maritime Claims, Rule E(8).
I will reserve the question of costs.
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I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren |
Associate:
Dated: 20 April 1998
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Counsel for the Applicant: |
Ms L Muston |
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Solicitor for the Applicant: |
Conway Leather Shaw |
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Counsel for the Respondent: |
Mr A S Bell |
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Solicitor for the Respondent: |
Michell Sillar |
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Solicitor for the Master and Crew: |
Levingstons Solicitors |
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Date of Hearing: |
20 March 1998 |
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Date of Judgment: |
7 April 1998 |
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