FEDERAL COURT OF AUSTRALIA

Pan-United Marine Limited v The Ship “Farid F” [2005] FCA 57

ADMIRALTY PRACTICE – application for leave to serve writ in rem – whether good reason for leave to be granted.

Admiralty Act 1988 (Cth) ss 4(3), 5(1), 10, 15, 17, 41

Admiralty Rules (1988) rr 20, 80

Pan-United Shipyard Pte Ltd v The Ship “Rodolfo Mata” [2004] FCA 117 cited

Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 cited

The “Helene Roth” [1980] 1 QB 273 cited

PAN-UNITED MARINE LIMITED v THE SHIP “FARID F”

WAD28 OF 2004

LEE J

31 JANUARY 2005

PERTH

THE COURT ORDERS THAT:

1.         Within seven days the plaintiff file an affidavit deposing to the correct name of the plaintiff and amend the writ accordingly.

2.         The plaintiff have leave to serve the writ until and including 6 August 2005.

3.         There be no order as to costs.

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

REASONS FOR JUDGMENT

LEE J:

1                     By a Notice of Motion filed on 28 January 2005 and heard ex parte on 31 January 2005 the plaintiff, a foreign corporation incorporated in Singapore, seeks an order that it have leave “until 6 February 2006” to serve the writ in rem issued in this matter on 5 February 2004.

2                     Rule 20 of the Admiralty Rules(“the Rules”) made under s 41 of the Admiralty Act 1988 (Cth) (“the Act”) provides:

‘Initiating process in a proceeding commenced as an action in rem is effective for service for a period of 12 months after it is issued and may not be served after that time without the leave of the court.’

3                     The principles to be applied on such an application for leave were considered  in Pan-United Shipyard Pte Ltd v The Ship “Rodolfo Mata” [2004] FCA 117 at [7]-[12].

4                     The relevant facts in this matter are as follows.

5                     The port of registry for the defendant ship (“the vessel”) is Kingston in Saint Vincent and The Grenadines.  The “relevant person” named in the writ is Farid Investments SA, said to be incorporated in Saint Vincent and The Grenadines and said to be the owner of the vessel.  The plaintiff claims a sum of S$315,175.00 for work done and services rendered in respect of the vessel at Singapore between December 2002 and March 2003.  The claim is a “general maritime claim” as defined in s 4(3) of the Act and the proceeding was commenced as an action in rem pursuant to s 17 of the Act.  It is not contended by the plaintiff that the proceeding is on a maritime lien or other charge in respect of the vessel and, therefore, also an action in rem under s 15 of the Act.  By s 5(1) of the Act, the Act applies to the claim notwithstanding that both the place of domicile of the owner of the vessel and the place where the claim arose are outside Australia.  Pursuant to s 10 of the Act jurisdiction is conferred on the Court in respect of a proceeding that may be commenced as an action in rem under s 17 of the Act. 

6                     The vessel operates as a carrier of livestock.  It has loaded cargo in several Australian ports since the date of issue of the writ, most recently in Fremantle and in Portland in November 2004.  The plaintiff, therefore, has had the opportunity to effect service of the writ on the vessel on a number of occasions, a circumstance that, ordinarily, would count against the grant of leave if the plaintiff were unable to provide a satisfactory explanation for its failure to take steps to effect service of the writ at the earliest opportunity and thereby give notice to the world of the plaintiff’s claim on the vessel granted by the Act.  It is to be noted that in respect of an action in rem commenced under s 17 of the Act the interests of a third party could be adversely affected by an extension of the time in which the writ may be served.  That would be so because s 17, in respect of general maritime claims to which it applies, has effect equivalent to a statutory lien attached to the vessel at the time the action is commenced.  That is to say once an action in rem is commenced under s 17 the vessel is liable to arrest notwithstanding any change in ownership of the vessel thereafter, as if the action was on a maritime lien. 

7                     The plaintiff deposed that in the period after the writ was issued the plaintiff and the relevant person were engaged in settlement negotiations and the plaintiff formed the opinion that arrest of the vessel when it entered Australian waters could jeopardise settlement.  The Court was informed that the situation now is that settlement of the plaintiff’s claim has not been effected and that if leave were granted to serve the writ later than one year from the date of issue of the writ the plaintiff would arrest the vessel at the first opportunity.

8                     The plaintiff deposed that although it had become aware of a “rumour” that ownership of the vessel has changed, a search of the Lloyds Register of Ships disclosed no change in the registered details of the owner. 

9                     If the application for leave to serve the writ beyond the period of twelve months from the date of issue were refused the plaintiff’s claim would not be time-barred and the plaintiff could commence a new proceeding.  However, if at the time the proceeding were commenced the relevant person in this proceeding was no longer the owner of the vessel the proceeding could not be commenced as an action in rem under s 17.  The proceeding would have to be commenced as an action in personam,jurisdiction in respect of which is conferred on the Court by s 9 of the Act.  (See: The “Helene Roth” [1980] 1 QB 273 per Sheen J at 280). 

10                  Rule 20 is in broad terms and contains no qualification upon the discretion to grant leave.  In addition it is to be noted that r 80 of the Rules provides the Court with a broad power to ameliorate the operation of any Rule.  For the purpose of this application it may be accepted that there is implied in r 20 a requirement that a plaintiff show “good reason” for the grant of leave. (See: Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 per Lord Brandon at 622).  What constitutes “good reason” will depend upon all the circumstances of a particular case and the exercise of the judgment of the Court.  Material to the consideration of the application for leave will be the plaintiff’s explanation for service not being effected within the time permitted by r 20. 

11                  The application for leave in this matter may be said to be finely balanced.  On the one hand it is apparent that the relevant person will not be prejudiced if leave were granted.  Also the plaintiff should not be penalised for attempting to negotiate a settlement to bring the litigation to an end to save substantial costs and avoid unnecessary use of the Court’s resources.  Furthermore, it can be understood why the arrest of the vessel was postponed whilst discussion of settlement took place, given that if the vessel was carrying live-stock at the time of arrest it could present difficult issues for all parties concerned with the handling of the cargo, unlike the arrest of other cargo vessels.  On the other hand, extending the period in which service of the writ may be effected could also extend the operation of s 17 of the Act to the prejudice of a third party that acquired the vessel without notice of the plaintiff’s claim.  Of course, the circumstances in which such a change of ownership occurred, and the extent to which the purchaser was indemnified against any loss suffered by enforcement of prior claims, would always be relevant.  (See: The “Helene Roth” at 281-282). 

12                  I am satisfied that in all the circumstances of this case it is appropriate to grant leave to serve the writ after the period of twelve months from the date of issue of the writ has expired.  However, the leave granted should be limited to a period of six months and should not, as sought by the plaintiff, extend for a further period of twelve months.  If the vessel, or a surrogate vessel, does not enter Australian waters in that period the plaintiff may apply once more for further leave to serve the writ if it is appropriate to do so in all the circumstances. 

13                  Solicitors for the plaintiff informed the Court that the name of the plaintiff as it appears in the title of the writ was changed on 31 January 2004.  It is to be noted that the date on which the proceeding was commenced was subsequent to the date on which the change of name was effected. The plaintiff will be directed to file within seven days an affidavit deposing to the foregoing circumstances and to amend the name of the plaintiff in the writ accordingly.

Associate:

Dated:              7 February 2005