FEDERAL COURT OF AUSTRALIA

Tai Shing Maritime CO SA v The Ship “Samsun Veritas” as surrogate for the Ship “Tai Hawk” [2008] FCA 1546

ADMIRALTY – urgent ship arrest – serious safety and financial risks in ship remaining in Port – urgent orders sought permitting ship to move beyond the 12 mile zone – orders made permitting ship to make 12 hour trip to suitable port – jurisdictional questions – balancing interests

Admiralty Act 1988 (Cth) s 19

SC Derrington and JM Turner The Law and Practice of Admiralty Matters (1^st ed, Oxford University Press, 2007) 

Commandate Marine Corp v The Ship “Boomerang I” [2006] FCA 859

Den Norske Bank (Luxembourg) S.A. v The Ship ‘Martha II’ [1996] FCA 136

Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland (1995) 59 FCR 535

Sovremenniy Kommercheskiy Flot v ‘Socofl Stream’ [1999] FCA 42

TAI SHING MARITIME CO SA v THE SHIP "SAMSUN VERITAS" AS SURROGATE FOR THE SHIP "TAI HAWK"

WAD 223 of 2008

MCKERRACHER J

16 OCTOBER 2008

PERTH

THE COURT ORDERS THAT:

1.                  The ship the ‘Samsun Veritas’ presently under arrest in Port Hedland, Western Australia be permitted whilst under arrest as soon as practical with all dispatch and without deviation to sail to the port of Dampier, Western Australia and to proceed directly to a designated berth, buoy or other anchorage and remain there until further order of the Court.

2.                  The plaintiff be permitted to place a representative to remain on board the ‘Samsun Veritas’ for the period of voyage by and movement of the ship under this order.

3.                  The Marshal mayauthorise to be on board the ‘Samsun Veritas’ such persons as he shall, in his discretion, deem appropriate for the purpose of retaining the safe custody, control and preservation of the ship from leaving the anchorage in Port Dampier.

4.                  There be liberty to any party or any person affected by these orders to apply on 2 hours notice.

5.                  The costs of and incidental to this application and this order be reserved.

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

REASONS FOR JUDGMENT

1                     Early this morning (WST) I made orders permitting a ship that is under arrest in Port Hedland, Western Australia to sail to the Port of Dampier in Western Australia on certain conditions.  These are my reasons. 

2                     At 5.00 pm yesterday, (15 October 2008) the ship ‘Samsun Veritas’ was arrested in Port Hedland.  The vessel is fully laden with 140,000 tonnes of iron ore.  Variable spring tides are particularly significant at present.  There is a very real likelihood of the fully laden vessel running aground.  Last night its keel was less than half a metre from the ocean bed in the port.  Safety and financial considerations in those circumstances are very significant.  From a safety perspective it is essential that the ship be moved out of the port. 

3                     This application was brought by an Admiralty Marshal of this Court on an urgent basis seeking directions from the Court in relation to the movement of the ship from its berth in Port Hedland to a proposed anchorage point outside the Port’s area and beyond the territorial waters of Australia. 

4                     In support of the application was an unsworn affidavit of Mr Clive Cassin, Admiralty Marshal.  The Admiralty Marshal gave an undertaking to the Court that the affidavit would be sworn at the earliest opportunity.  I have therefore proceeded on the basis that the facts set out in the affidavit are, at least in a preliminary way, properly before the Court.  The affidavit relevantly provides:

I have been informed by Constable Michael Martin that at 5pm on 15 October 2008 the ship “Samsun Veritas” was arrested at Port Hedland, Western Australia. 

I have been informed by the Port Hedland Harbour Master Mr Lindsay Copeman that as the ship “Samsun Veritas” is fully laden it will need to be moved to a point beyond 12 nautical miles from the port to enable safe anchorage.  From my discussion with the Harbour Master I undstand (sic) this will be outside port limits, but inside port control, which extends 20 nautical miles.

I verily believe that the Programmed shipping movements at Port Hedland required the “Samsun Veritas” move from its current berth at the earliest opportunity.  Concerns have also been raised by BHP’s Roger Richardson regarding lack of safe draught clearance between the ship’s keel and ocean bed should the vessel not be moved by 9am this morning. 

5                     Additionally there is before the Court an affidavit sworn by Jenney Bazakas on 15 October 2008 in support of the application for an arrest warrant. 

6                     Time did not permit the collation of all evidence on affidavit as this hearing was held in the early hours of the morning (WST) of 16 October 2008.  I was informed, however, by counsel for BHP who intervened as the owner of the berth, that if the vessel is unable to get away by tomorrow, it will be at least a week before it can do so safely for tidal reasons.  Even today the tides are such that it needed to leave by 9.00 am. 

7                     The cargo value in relation to four other ships waiting to berth and which would be affected by a delay of a week was $12 million per day.  The total loss (including other claims) in a week was estimated at about US$86 million.  As stated four other ships are presently awaiting the berth occupied by the ship Samsun Veritas.  Although the safety considerations are the paramount considerations, the financial issues are certainly not insignificant. 

8                     The particulars of the plaintiff’s claim are that on 15 October 2007 Samsun Logix Corporation (SLC) time chartered the ship ‘Tai Hawk’ from its owner, the plaintiff.  On 1 October 2008, SLC provided notice in writing to the plaintiff that it intended to redeliver the Tai Hawk before the contractual delivery date under the Time Charterparty.  Accordingly it is argued that SLC was in repudiatory breach of the Time Charterparty.  The plaintiff accepted the breach on 15 October 2008 and claims for unpaid hire due under the Time Charterparty and damages for the repudiatory breach pursuant to s 19 of the Admiralty Act 1988 (Cth). 

9                     The plaintiff’s current estimate of damages which will be sustained as a result of the repudiatory breach of the Time Charterparty is approximately US$1,600,000 together with interest and legal costs.  At present pursuant to an order of the United States District Court, Southern District of New York made on 9 October 2008 an order for the Issue and Process of Maritime Attachment has been made against SLC in the sum of US$2,600,000.  The order has been served on Chase Manhattan Bank and New York Bank in New York where funds belonging to SLC in the sum of US$2,600,000 have been secured but are the subject of challenge.  I was informed by counsel for the plaintiff that the plaintiff is not intending to ‘double up’ on its claim for security and steps will be taken to release those funds if they have not already been released. 

10                  The plaintiff accepts the concerns as to the safety and financial risks and proposes that the vessel be permitted to sail under arrest to the Port of Dampier which is on route to its ultimate destination in Asia.  It will incur additional costs in berthing at Dampier.  I was informed that in a practical sense it is possible for the ship to berth at Dampier in about 12 hours’ time from its departure from Port Hedland.  Undertakings as to damages and fees of the Marshal have been given and funds have been advanced in respect of the Marshal’s expenses. 

11                  In Sovremenniy Kommercheskiy Flot v ‘Socofl Stream’ [1999] FCA 42, the applicant was the consignee of a cargo of steel coils.  It sought orders permitting the vessel to sail from the port of arrest (Brisbane) to Newcastle in order to discharge the cargo.  The arresting party did not oppose the order.  The applicant offered cash security to cover the Marshal’s expenses of the voyage.  There was evidence that it would not be necessary for the vessel to leave the territorial sea in the course of the voyage so the vessel could at all times remain within the jurisdiction of the Federal Court.  However the Marshal opposed the application on the basis that nothing could prevent the ship making a break for the international waters if the master so decided.  The Court accepted the Marshal’s argument and declined to make the orders.  The situation here is somewhat different.  The consignee has not been heard from, indeed, the owners of the vessel have not appeared and the Marshal does not oppose the ship going to Dampier provided adequate security arrangements both in a physical and financial sense are accommodated.  Above all, there are very significant public interest considerations.  On the other hand, it will leave territorial waters for part of that voyage. 

12                  In Den Norske Bank (Luxembourg) S.A. v The Ship ‘Martha II’ [1996] FCA 136the Martha II was arrested in Melbourne at the instance of a mortgagee.  Against opposition from the mortgagee, orders permitting the Ship to continue its voyage were made subject to certain conditions being fulfilled and undertakings being given by the Time Charterer.  These included payment before the ship left Melbourne of the Marshal’s costs of supervising the movement and the cost of arrest up to the time of the order.  The Marshal and two armed members of the Australian Protective Service were onboard.  The ship proceeded to Botany Bay where some cargo was offloaded.  On the same day Sheppard J varied the original orders made by Olney J to direct that no new cargo be loaded onboard, the refinancing, which was expected, not having eventuated.  His Honour ordered the ship to proceed from Botany Bay to Port Jackson to berth or anchor in the custody of the Marshal.  Sheppard J distinguished that case from orders for movements of a ship and discharge of the cargo in an earlier decision in Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland (1995) 59 FCR 535 concerning the Ship ‘Iron Shortland’ in which his Honour had approved orders permitting the arrested vessel to sail between Port Hedland, Western Australia and Port Kembla in New South Wales.  His Honour observed that in that earlier case, the orders were made by consent undertakings being provided by Australian Third Party Charterers and the case involved public interest considerations, namely, the potential shortage of iron ore at the Port Kembla steel works. 

13                  Similarly, in this case there are very urgent and paramount public interest considerations.  On the other hand, Sheppard J’s judgment may be taken as agreeing with the earlier view of the Court of Appeal to the effect that an arrested ship should not be permitted out of the Court’s jurisdiction. 

14                  I am also particularly mindful of orders, similar in nature to those I would make, being made by Allsop J in Commandate Marine Corp v The Ship “Boomerang I” [2006] FCA 859 concerning the Ship ‘The Boomerang I’.  As observed in SC Derrington and JM Turner The Law and Practice of Admiralty Matters (1^st ed, Oxford University Press, 2007) at 7.31, similar orders have been made in New Zealand.  The learned authors are critical of such and approach. 

15                  The ‘Samsun Veritas’ has now left for Dampier – to do so it will sail outside of territorial waters.  Any orders attempting to preclude that would be quite inappropriate for safety reasons.  There is a jurisdictional question as to making orders which purport to take effect, in part, beyond territorial waters.  The power of the Marshal is one basic consideration.  On the facts of this case, however, the ship could not stay where it was, nor could it be ordered to be anchored outside of the 12 mile zone.  There was no application to set aside the arrest and release the ship.  There is precedent for the pragmatic approach and general liberty to apply on short notice.  Making the orders does not preclude the jurisdictional debate being raised at a later time.

16                  Each case will present different considerations but for the reasons referred to above in this instance, I am satisfied it is appropriate to make and I will make the following orders:

1.                  The ship the ‘Samsun Veritas’ presently under arrest in Port Hedland, Western Australia be permitted whilst under arrest as soon as practical with all dispatch and without deviation to sail to the port of Dampier, Western Australia and to proceed directly to a designated berth, buoy or other anchorage and remain there until further order of the Court.

2.                  The plaintiff be permitted to place a representative to remain on board the ‘Samsun Veritas’ for the period of voyage by and movement of the ship under this order.

3.                  The Marshal mayauthorise to be on board the ‘Samsun Veritas’ such persons as he shall, in his discretion, deem appropriate for the purpose of retaining the safe custody, control and preservation of the ship from leaving the anchorage in Port Dampier.

4.                  There be liberty to any party or any person affected by these orders to apply on 2 hours notice.

5.                  The costs of and incidental to this application and this order be reserved.

Associate:

Dated:         16 October 2008