Daeyang Shipping Co Ltd v U-Ming Marine Transport (Hong Kong) Ltd

[2004] FCA 991

ADMIRALTY AND MARITIME JURISDICTION – order for preliminary discovery – limitations to be ordered on use.

Federal Court Rules – Order 15A

Harman v The Home Office [1983] 1 AC 280

Western Bulk Carriers (Aust) Pty Ltd v Cosco Bulk Carrier Co Ltd  [2002] FCA 1520.

Church of Scientology of California v DHSS [1979] 3 All ER 97

Alterskye v Scott [1948] 1 All ER 469.


N 1104 of 2004



21 JULY 2004





N 1104 of 2004













21 JULY 2004






  1. The matter be stood over to 22 July 2004 at 9.30am for the making of the terms of the final orders on this application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.




N 1104 of 2004














21 JULY 2004




1                     In this matter the plaintiff seeks orders under Order 15A of the Federal Court Rules for preliminary discoveryIn large part, the satisfaction of the relevant provisions to entitle an order to be made for the relevant orders sought is not in dispute.  There are some qualifications to those assertions to which I will come.  The defendant is the registered owner of a 10-year-old bulk carrier, the MV “Cape Oceania”, of 77,132 gross registered tonnes, flagged in Hong Kong with a summer deadweight tonnage of slightly over 150,000 metric tonnes.  The vessel was time chartered by the defendant owner to a company not before the Court called China National Chartering Corp (Sinochart) being, apparently, an organisation incorporated in Beijing.

2                     The defendant registered owner is a Hong Kong company.  Sinochart, as disponent owner, further time chartered the vessel by way of trip charter to the plaintiff.  The plaintiff deployed the vessel pursuant to a voyage charter with Korean company POSCO for the carriage from Australian ports at Port Kembla and Dalrymple Bay to Korea of 140,000 wet metric tonnes of coal, 10 percent more or less owner's option.  The time charter entered by the plaintiff with Sinochart was dated 17 May 2004.  The voyage charter with POSCO was dated 12 May 2004.  No doubt the timing can be explained by the fixing of the vessel under the time charter somewhat earlier.  Under the voyage charter lay/can is June 10 and 26, 2004.

3                     The vessel has had some troubling episodes in relation to its engine on the ballast voyage to Australia, that is, the loading voyage to first Port Kembla and then Dalrymple Bay.  The vessel stopped on at least one occasion not far from the Barrier Reef for repairs.  Repairs were effected.  Prior to arriving at Port Kembla, the vessel was forced to enter the Port of Newcastle, in effect, as a port of refuge by reason of the mechanical problems.  Those mechanical problems and the slowness of the vessel's speed together with the ordinary vicissitudes of the voyage have led to the vessel being substantially delayed.

4                     Mr Wilson, the solicitor for the plaintiff, identifies in his affidavit the potential exposure of the plaintiff to its voyage charter of POSCO in significant sums of money by way of possible demurrage.

5                     The vessel is at Port Kembla loading at the moment.  She will sail tomorrow for Dalrymple Bay for further loading and then leave Dalrymple Bay for Korea.  She is within the jurisdiction.  There is no agreement as to whether or not the vessel is liable for arrest if proceedings are brought, but the urgency of the application under Order 15A is in order that a decision may be made as to whether there should be an in personam claim for economic loss by the plaintiff against the defendant presumably in respect of which, it is anticipated, that an in rem claim may be made to obtain security.

6                     Mr Wilson's exhibit to his affidavit identifies the history of the matter.  There were inspections of the vessel requested and granted to a degree in June and prior to 16 July 2004.  Whilst the parties are not in contractual relations, and whilst I do not have the time charter between the defendant and Sinochart, clause 62 of the charter between Sinochart and the plaintiff provides for inspection in the following terms:

Charterers shall have the option of inspecting the vessel superficially at their expense prior to delivery and also at any time during this Charter by giving reasonable advance notice to the Owners. Owners and/or Master shall give every facility and assistance to carry out such inspection. Charterers’ inspectors to sign the usual Letter of Indemnity to Owners before boarding vessel.

7                     Those inspections were made by consent, in effect, and are not and should be understood not to be the subject of any restriction, which I will identify in due course.  That is a complication which is of relevance in terms of what relief should be given by way of limitation under access to information or documents pursuant to Order 15A.

8                     The plaintiff's solicitors made inquiries of Australian Ship P & I Pty Limited, in Newport in Sydney of a solicitor, Mr Neill, in which information was sought from Mr Neill including correspondence between the ship and the head owner and the ship's computer records. 

9                     Mr Neill's response was less than forthcoming, and that is not said in the slightest way critically.  He made clear that he was acting for a p & i club, which he understood was providing some kind of liability insurance to Sinochart, though he referred to Sinochart in communications as Sinotrans.  These communications were in mid-July 2004, shortly prior to the application under Order 15A being brought. 

10                  The inquiries as to the progress of the vessel and as to the difficulties with the vessel began as early as the first week of June 2004.  There does not appear to have been any concerted attempt by the plaintiff to extract documentation directly from Sinochart.  However, from the body of correspondence that has been provided to me, and from the inquiries of Mr Neill, in all the circumstances of the vessel coming to Australia and the limited time available and what must be understood I think to be the developing concern as to how this matter should be dealt with, I am prepared to accept that generally speaking there has been in all the circumstances a satisfaction of all Order 15A rule 6.

11                  The matter came before Beaumont J on Friday, 16 July 2004.  Orders were made to hold the position and to allow inspection on the Saturday of the vessel.  That inspection was carried out.  There is an allegation (perhaps allegation is putting the matter too highly) that Mr Cosh, the surveyor retained by the plaintiff who inspected the vessel on Saturday exceeded what he was entitled to do in terms of inspection.  He is not criticised for that but it is pointed to by the defendant as an example of how things can go awry if parties do not have precise undertakings to guide their behaviour.  The problem with that I think is that it is not clear to me that Mr Cosh was exceeding what he was entitled to do. Although, even if he were, Mr Cosh or the solicitor on his behalf had already signed an undertaking.

12                  Even if it be taken to be outside what the order entitled, I do not think in all the circumstances it is a matter that attends the exercise of my discretion.  That, in particular, is the case because the parties were confronted on Saturday with one of the pistons having been removed from its engine cylinder and the matter is one which could reasonably have expected to have been included within the order had it been understood that that had occurred.  In any event, if there has been an exceeding of the order, that can be dealt with in due course but for the reasons I have given I do not think that it really affects how I should approach the matter.

13                  The claim that the plaintiff says it may want to bring will not be necessarily an easy one to maintain and perfectly properly it is thought appropriate to invoke the powers of the Court under Order 15A before beginning such a suit.  There is no contractual privity between the plaintiff and the defendant.  The structure of the employment of the vessel and the contractual relations are as I have identified.

14                  The plaintiff will need to identify a duty of care based on a responsibility of the defendant not to cause pure economic loss.  There is no need to rehearse the complexities of that body of law in this country, let alone elsewhere to understand that the matter is a vexed one.  But the question of the vexed nature of the body of law underpinning the creation of a duty of care leads to the difficulty of identifying any bright lines to limit the entitlement of documents under Order 15A.  In a sense the whole of the circumstances of any broad relationship between the parties must be understood before one can come to view whether or not there is a duty.  Thus, the responsibility of solicitors and counsel to understand, as far as possible, the full nature of the relationship able to be identified before advising.

15                  The debate before me is largely as to two matters, subject to a third matter of costs, which I do not propose to deal with today.  The first matter is the form of undertaking to be reasonably required for access to information and documents.  Again pursuant to the orders made under Order 15A, not made pursuant to earlier inspection either under clause 62, or simply by way of commercial permission. By way of parenthesis it is necessary to understand that what I mean by this.  If information was obtained under clause 62 or pursuant to commercial permission, even if it in a sense is renewed in its reception under Order 15A the regime to govern it is the regime previously existing under clause 62.  That is the Order 15A access; the repeated Order 15A access does not transform the obligations in the use of that information to the Order 15A obligations.  They remain, if I may use the expression, the earlier obligations, if there be any.

16                  The second issue is the scope of the access to certain documents.  I will deal with the second issue first because it is simpler.  Paragraphs 1(e), (f) and (g) in the application are in the following terms:

e)       Correspondence between the ship and the defendant, its brokers and agents relating to any main engine breakdowns between the period of 1 May 2004 to 16 July 2004;

f)       The charter party or charter parties between the defendant and China National Chartering Corp. (Sincohart); and

g)      All correspondence between the Defendant, its brokers and agents and China National Chartering Corp. (Sinochart), its brokers and agents in relation to the charter of the vessel “Cape Oceania”.

17                  There is no issue about subparagraph (f), that document or documents will be produced, as I understand it.  Subparagraphs (e) and (g) are said not to be obliged to be produced except by the regime propounded voluntarily by the defendant on the basis that there have not been sufficient inquiries made for the satisfaction of Order 15A rule 6(b).  For the reasons I previously gave I do not accept that submission.  I think in the light of the suit that is the subject of the necessary future decision that the correspondence referred to in subparagraph (e) is directly relevant to that and I would order the granting of access to those documents in subparagraph (e).

18                  Subparagraph (g) is in my view too wide and I would not order correspondence in those terms.  It may simply be the file of the chartering broker, but I am not prepared to grant an order in those terms.  However, in discussions with Mr Cox in argument it became evident that there were in effect three classes of documents in respect of which I am prepared to make an order.  Those documents are subject to improvement in the felicity of drafting as follows.  I will call them substitute (g)(1), (g)(2) and (g)(3), they are as follows:

Substitute (g)(1)

            All correspondence between the defendant, its brokers and agents, and China National Chartering Corp (Sinochart) and its apparent brokers and apparent agents which evidence Sinochart passing on any communications from the plaintiff as to the vessel or its condition or its performance from 12 May 2004.


Substitute (g)(2)

            Any correspondence of the kind that I have identified evidencing the extent to which the defendant advised or was advising Sinochart of any problems with the vessel and dealing with the maintenance of the engines or any of them on the vessel from a time one month prior to the date of the charter party between the defendant and Sinochart up to 16 July 2004 to 12 May


Substitute (g)((3)

 Any on-hire surveys during the course of the charter between the defendant and China  

 National Charter Incorporation - Sinochart.

19                  More difficult is the question of restriction of access and undertaking.

20                  The regime requested by the defendant is contained in exhibit 2 to this application, being draft short minutes handed up.  The concern of the defendant can be encapsulated as follows.  It does not impute any impropriety to any party or any likely impropriety but it says that there are at least three charters which have, or one would expect to have, arbitration clauses.

21                 What concerns the defendant is that there may be an advantage being able to be gained by either the plaintiff or other parties in those arbitrations against the interests of the defendant in those other proceedings if leakage of the information occurs.

22                  The defendant is a Hong Kong company, the plaintiff is a Korean company, Sinochart is a Chinese company not from the special region of Hong Kong.  The plaintiff and the defendant are not in contractual relations.  They do not have any history of relationship with each other. What may be termed exorbitant or wide powers of the Court are being used to investigate on behalf of the plaintiff whether there may or may not be grounds to sue the defendant.

23                  One could well understand foreign corporations being concerned as to the extent and use of an ample power such as this in the Federal Court Rules.  That is not a reason at all to restrict the amplitude of the power.  As the decisions make clear, however, it is a reason why, for the confident administration of justice, that is for the confident perception of the administration of justice, in connexion with international clients there should be care taken in the terms of the making and execution of orders under Order 15A in circumstances such as this.

24                  The plaintiff recognises that there is a reasonable basis to go beyond the implied undertaking as in Harman v The Home Office [1983] 1 AC 280 and they proffer an express undertaking in terms as follows:

The plaintiff undertakes to the court that it will use any information or documents obtained under these orders for the purposes only of proceedings in this court of the kind mentioned in Order 15A rule 6(a).

This undertaking is an expanded version of the undertaking given in Western Bulk Carriers (Aust) Pty Ltd v Cosco Bulk Carrier Co Ltd  [2002] FCA 1520.

25                  In all the circumstances I think something wider than that proposed by the plaintiff is appropriate.  That is not to cavil with what was said in either the Church of Scientology of California v DHSS [1979] 3 All ER 97 or Alterskye v Scott [1948] 1 All ER 469.  Rather, for the reasons I have already identified, and to achieve full confidence in the administration of justice between two international parties who have no commercial relationship, litigating and being forced to litigate in a third country - not of either's choosing in one sense - it is appropriate to ensure that both parties understand the rules that govern the exercise of an ample and wide power such as Order 15A.

26                  The orders that I propose are as follows.  The first is that the parties bring in tomorrow perhaps more felicitously drafted orders to encompass the orders that I have made earlier and to encompass the orders that I propose to make.  If there is any debate about them we can have it at 9.30 am tomorrow.

The terms of the orders I propose are:

THE COURT NOTES the undertaking of the plaintiff that it will use any information or documents obtained under these orders for the purposes only of proceedings in this court of the kind mentioned in Order 15A rule 6(a).


1.   The solicitor on the record and with the responsibility for the file acting for the plaintiff bring to the attention of any person to whom the information or documents are provided under these orders the plaintiff’s undertaking above and inform any such persons that the use by him or her of such documents or information may constitute a contempt of this Court.

2.   The information and documents obtained by these orders is and are not to be disclosed or used by any party otherwise than for the purposes of making a decision to bring an action in this Court or for conducting any such proceedings, without the leave of this Court.

3.   The solicitor identified in order 1 inform any person or persons to whom the documents or information is or are provided of order 2 in relation to the documents and information and that a breach of that order may constitute a contempt of this Court.

4.   The information and documents are to be provided and disclosed under these orders, in the first instance, only to such persons who are necessary parties to the decision to bring an action and, thereafter, if a suit is brought the use of information or documents is to be governed by the ordinary undertakings in litigation.

5.   The solicitor identified in order 1 is to swear an affidavit no later than the day following the day on which the decision to sue or not to sue is made, such affidavit is to set out what information was given to which persons. This affidavit is to be sworn on the extent of that solicitor’s knowledge, information or belief.

6.   Once a decision to sue or not to sue is made the solicitors for the plaintiff communicate this decision promptly to the defendant and file and serve the affidavit referred to in order 5.

7.   The matter be stood over to a date to be fixed for the making of any further order, in particular any order varying or modifying the terms of access depending on the decision whether to sue or not to sue.

8.   Liberty to apply on 24 hours’ notice in this O. 15A application only.

9.   For the avoidance of doubt, information and documents obtained by the plaintiff, its servants or agents prior to 17 July 2004 is and are not information and documents obtained by these orders, even if such information and documents is or are provided again on or after 17 July 2004.

27                  I will reserve the question of costs.



I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.





Dated:              2 August 2004



Counsel for the Plaintiff:

Mr E Cox



Solicitor for the Plaintiff:

Norton White



Counsel for the Defendant:

Mr R F Margo SC with Mr A P Spencer



Solicitor for the Defendant:

Blake Dawson Waldron



Date of Hearing:

21 July 2004



Date of Judgment:

21 July 2004